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Kansas City

/beige-book-reports/2010/2010-12-kc

"Beige Book Report: Kansas City\nDecember 1, 2010\nThe District economy strengthened in October and early November, despite headwinds from the residential and commercial construction sectors. Additional gains in consumer spending boosted optimism for holiday sales among retailers and auto dealers. With moderate gains in October and November, manufacturing plant managers expected production activity and new orders to rise further with a pick-up in export activity. Energy and agricultural activity rose robustly with strong demand, low inventories, and a weaker dollar lifting commodity prices. In contrast, residential and commercial construction remained weak, although commercial real estate sales and vacancy rates were expected to improve in coming months. Banking conditions remained stable with more District bankers expecting improvements in loan quality. Despite higher raw material prices, wholesale and retail prices held steady. Wage pressures remained subdued, though some firms were hiring for seasonal and specialized labor.\nConsumer Spending\nConsumer spending improved further in October and November, and contacts were optimistic about future sales heading into the holiday season. District retailers reported stronger sales with limited discounting on merchandise. Contacts indicated an uptick in durable goods sales, especially appliances, while sales of luxury items were slow. After declining in the last survey period, auto dealers reported a slight improvement in sales, especially for trucks and used cars. Dealers anticipated demand would continue to strengthen through year-end, and some planned to hire sales staff and service technicians. Restaurant traffic was up, while the average check amount declined. With the end of the summer travel season, average room and occupancy rates edged down at District hotels, but tourism activity was stronger than expected.\nManufacturing and Other Business Activity\nAfter rebounding in the last survey period, District manufacturing activity continued to expand, and many firms expected further growth in the next six months. While production levels varied across industries, some of the strongest gains were at food, fabricated metal, and electronics manufacturers. In general, new orders, shipments, and production activity strengthened in recent weeks, contributing to rising order backlogs and shrinking finished goods inventories. In the next six months, plant managers expected production, shipments and orders, especially for export, to strengthen further. In addition, more factory managers planned to increase staff or make capital purchases in coming months. High-tech firms also reported a rise in sales that was expected to continue through year-end. After slowing in the last survey period, activity in the transportation sector stabilized and some firms noted a shortage of qualified drivers.\nReal Estate and Construction\nResidential and commercial construction remained sluggish in October and November, while commercial real estate sales and vacancy rates were expected to improve in coming months. After contracting with the end of the homebuyers tax credit program, a few District homebuilders noted a slight uptick in housing starts. Still, District home prices edged down and sales continued to fall heading into the typical winter lull in home buying activity. District contacts noted that the starter home market remained active, but long lead times for selling mid- and upper-priced homes were boosting inventories and limiting \"move-up\" opportunities. Mortgage loan activity rose as homeowners refinanced existing mortgages to lower payments and shorten terms. Commercial construction activity declined and was expected to remain weak over the next three months. District commercial real estate contacts reported little change in vacancy rates, absorption rates, and prices. Some firms, however, reported an uptick in sales and expected vacancy rates to edge down in coming months.\nBanking\nBankers reported stable loan demand, increased deposits, and an improved outlook for loan quality in the recent survey period. Overall loan demand continued to hold steady as demand for commercial and industrial loans, commercial real estate loans, and consumer installment loans remained stable. In contrast, bankers reported stronger demand for residential real estate loans. Compared to the previous survey, credit standards remained unchanged in all major loan categories. Loan quality was essentially unchanged compared to one year ago. Bankers, however, expected loan quality to improve over the next six months. Deposits, especially for transaction accounts and savings accounts, increased after having been flat since late last year.\nAgriculture\nAgricultural conditions improved since the last survey period. Favorable weather conditions across the District facilitated an early corn and soybean harvest with yields less than original estimates but slightly better than their five-year average. The winter wheat crop was progressing normally. Crop prices continued their steady climb through the fall harvest, boosting incomes for crop farmers but raising feed costs for livestock producers. Farmland values and cash rental rates strengthened further with higher farm incomes and robust demand for good quality farmland from both farmers and non-farm investors. Farm operators also increased spending on farm equipment and grain storage bins. Demand for farm operating loans was steady, and agricultural bankers reported ample funds were available for qualified borrowers at historically low interest rates.\nEnergy\nDistrict energy activity continued at a robust pace in October and November. The number of active drilling rigs in the District rose further, primarily due to natural gas expansion in Oklahoma and New Mexico. Producers expected drilling activity to remain elevated over the next three months; however some firms reported that equipment shortages, difficulty finding qualified labor, and availability or cost of financing were constraining drilling activity. District contacts anticipated a modest increase in natural gas prices as the winter heating season approached. Crude oil prices were also expected to strengthen with rising demand and a weaker dollar. After surging in the last survey period, Wyoming coal production continued apace. With higher ethanol prices, profits at ethanol plants held steady despite higher corn prices raising operating costs.\nWages and Prices\nPrices paid for raw materials rose further in October and November, but selling prices and wages generally held steady. District manufacturers reported higher raw materials prices and expected additional increases in the next six months. They also expressed a limited ability to pass on higher input costs to current finished goods prices. However, more factory managers expected to receive higher finished goods prices over the next six months. Restaurants paid more for food, but kept menu prices stable. After rising in the last survey, prices for building materials held steady. Though a limited number of firms were hiring, primarily for specialized labor or seasonal workers, few were raising wages to attract qualified applicants. Wage pressures were expected to remain subdued through the end of the year.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

National Summary

/beige-book-reports/2010/2010-12-su

"Beige Book: National Summary\nDecember 1, 2010\nPrepared by the Federal Reserve Bank of Cleveland based on information collected on or before November 19, 2010. 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 indicate that the economy continued to improve, on balance, during the reporting period from early/mid-October to mid-November. Economic activity in the Boston, Cleveland, Atlanta, Dallas, and San Francisco Districts increased at a slight to modest pace, while a somewhat stronger pace of economic activity was seen in New York, Richmond, Chicago, Minneapolis, and Kansas City. Philadelphia and St. Louis reported business conditions as mixed.\nManufacturing activity continued to expand in almost all Districts, with relatively strong growth seen in metal fabrication and the automotive industries. Reports also showed steady to increasing activity for professional and nonfinancial services. Two Districts noted a decline in demand from government agencies due to budgetary shortfalls. Reports on consumer spending tended to be positive. Nonetheless, several Districts noted that households remain price sensitive and focused on buying necessities. Expectations for the holiday shopping season were generally positive, with several Districts expecting higher sales when compared to year-ago levels. Sales of new cars and light trucks were largely higher than in our last report. Tourism improved in all reporting Districts.\nHousing markets remain depressed, with several Districts reporting further weakening during the past six weeks. Conditions in commercial real estate were mixed, and activity stayed at low levels. Agricultural conditions were generally favorable, with several Districts reporting yields nearing historic highs. Agricultural sales to off-shore buyers increased. Overall activity in the energy sector continued to expand.\nLending activity remained stable across most Districts. Credit quality has been steady to improving for most of the Districts that commented on it. Prices for final goods and services were fairly stable, despite rising input costs, especially for agricultural commodities, metals, and fuel. Hiring activity showed some improvement across most Districts. Wage pressures were contained.\nManufacturing\nManufacturing activity continued to expand in most Districts. New York was the only District where manufacturing activity was reported to have weakened, while Dallas reported that manufacturing was mixed. Metal fabrication increased in Chicago, Kansas City, Dallas, and San Francisco. Contacts in automotive industries reported gains in Boston, Cleveland, Richmond, Atlanta, and Chicago. The Boston, Kansas City, and San Francisco Districts reported increased sales for high-technology manufacturers, though Dallas noted that growth in orders and production in high-technology industries had slowed from earlier in the year. Steel producers and service centers in the Cleveland District reported that volume was either flat or improving, while Chicago noted some temporary softening in steel demand. Refiners in the Dallas and San Francisco Districts noted reduced production levels. The Philadelphia and Dallas Districts indicated little improvement in demand for manufacturers with ties to residential housing and construction. The Philadelphia, Cleveland, and Kansas City Districts reported that capital spending or spending plans had increased. On net, manufacturers in the St. Louis District reported they planned to expand operations. Contacts in Boston, New York, and Richmond commented on increasing input costs. Several Districts noted an optimistic outlook from manufacturers. Boston and Richmond described manufacturers as upbeat; New York and Chicago reported contacts as more optimistic; and Philadelphia and Minneapolis manufacturers expect increases in activity in the near term. However, several contacts in Dallas expressed concern about a decline in demand from government agencies, as budget shortfalls continue.\nNonfinancial Services\nActivity was steady to increasing for professional and nonfinancial services across most Districts. The exception was the St. Louis District, which reported a decline in service sector activity. Boston, Philadelphia, Minneapolis, and San Francisco noted growth in information technology services. Accounting demand remained stable in the Dallas District, bolstered by consulting and merger and acquisition work. The healthcare sector was said to be expanding in reports from Philadelphia and St. Louis, though Richmond noted no change in demand. Firms that provide services to governments in the Philadelphia District indicated that their clients were using less of their services because of the tight budget environment. Demand for transportation services increased in several Districts. Freight companies in Cleveland noted that volumes increased slightly during the past six weeks, and contacts in Atlanta said freight volumes had improved from a year ago, with both Districts recognizing gains in chemical shipments. Regional rail contacts in Dallas noted strong increases in volume. Contacts in Dallas said that intermodal transportation firms experienced increased cargo volumes, buoyed by demand from international clients, as well as a rise in international container trade volumes. Kansas City reported that the transportation sector stabilized but noted a shortage of qualified drivers.\nConsumer Spending and Tourism\nRetail spending showed improvement across most Districts, with the exception of Boston, Cleveland, Richmond and St. Louis, where results were mixed. A return to more seasonably cool weather was credited for boosting sales in the New York and Dallas Districts. Grocers reported rising sales in Cleveland and Richmond, while sales dropped off in San Francisco. Purchases of apparel improved in the Philadelphia, Chicago, and Dallas Districts. Expectations for the holiday shopping season were positive across Districts; however, in Richmond, retailers expected holiday shopping to be restrained. Reports from the Philadelphia, Cleveland, Atlanta, and Chicago Districts indicated that consumers remained value conscious and tended to focus on buying necessities. Purchases of big ticket items were soft in Richmond, St. Louis, and Kansas City.\nSales of new automobiles and light trucks rose in nine Districts during the reporting period, with several Districts indicating that vehicle inventories are now at appropriate levels. Dealers expect new vehicle sales to continue rising through year-end in the Philadelphia, St. Louis, and Kansas City Districts.\nTourism was characterized as stronger or improved in the Boston, New York, Richmond, Atlanta, Minneapolis, Kansas City, and San Francisco Districts, while business travel to destinations in the New York, Atlanta, and San Francisco Districts increased. Occupancy rates at hotels in Manhattan and Atlanta's major markets were higher than a year ago. The Richmond and Atlanta Districts noted a pickup in international visitors. In Boston, increased tourism was attributed to generous travel incentives and perceived value, while Richmond noted that discretionary retail spending by tourists was lower.\nReal Estate and Construction\nResidential real estate and construction activity remained at a low level in all Districts. The Philadelphia, Atlanta, St. Louis, and Minneapolis Districts reported some further weakening in home sales. Boston, New York, and Richmond characterized the market as soft; while Cleveland, Kansas City, Dallas, and San Francisco described the market as sluggish. The Chicago District reported that high inventories of unsold homes continued to be a drag on new residential construction and home prices. Residential house prices were mixed. Price declines were observed in New York, Philadelphia, Atlanta, and Kansas City; prices were flat to up in Minneapolis, and prices edged up in Boston. The Dallas District reported that home prices increased on a year-over-year basis. The rental market continued to offer incentives to tenants in New York, while strong demand for rental units was reported in Richmond and Dallas. Outlooks for 2011 were mixed.\nConditions in the commercial real estate industry were mixed during the reporting period. Several Districts reported flat demand and high vacancy rates, which translated into limited nonresidential construction activity. The New York, Atlanta, and Kansas City Districts noted some weakening in nonresidential activity, while the Boston and Dallas Districts indicated some modest improvement in commercial real estate. Reports from Cleveland and Chicago noted that most new projects fell generally into the infrastructure category. Contacts in Boston, Richmond, Kansas City, and Dallas expressed some optimism about the near-term outlook in their Districts, but contacts in several other Districts expressed a more cautious outlook.\nBanking and Finance\nBanking conditions remained stable across most Districts. Lending activity was reported as steady or unchanged in New York, Philadelphia, St. Louis, Kansas City, Dallas, and San Francisco, while a slight improvement was noted in Cleveland, Richmond and Chicago. The Atlanta District reported constrained credit conditions and weak loan demand. Contacts in Chicago and Dallas said that increased competition for high-quality borrowers resulted in more aggressive loan pricing. Demand for commercial and industrial loans was generally stable, though several Districts noted improvements in specific loan categories. The Cleveland and Chicago Districts reported increased lending for mergers and acquisitions, and access to credit by small businesses in Atlanta improved slightly. Consumer lending has remained stable at weak levels in most Districts. The San Francisco District reported that loan demand declined slightly as a result of households' desire to deleverage, while Chicago saw a small pickup in consumer lending. Several Districts reported increases in lending related to residential real estate, and, in particular, to refinancing activity. Reports on changes in credit standards were mixed. Bankers in New York reported a tightening in credit standards across all loan categories, Kansas City contacts indicated no change in lending standards, and Atlanta reported an easing in standards for small firms. Contacts in the Cleveland, Richmond, and Chicago Districts reported improved credit quality, but San Francisco bankers noted ongoing struggles with credit quality. The Cleveland and Richmond Districts both reported declines in delinquencies.\nAgriculture and Natural Resources\nMainly favorable weather conditions helped facilitate early harvesting and the planting of winter crops. The Chicago, Minneapolis, and Dallas Districts reported large to record-setting yields for certain crops. Agricultural prices continued to climb, boosting farm incomes. Reports from several Districts indicated that higher grain prices were raising feed costs for livestock producers. Nonetheless, contacts in Chicago noted that even with higher feed costs, margins for livestock producers remain positive. Strong global demand and tight supplies pushed cotton prices to near historic highs for growers in Atlanta and Dallas. San Francisco noted that reductions in overseas yields, combined with the lower value of the U.S. dollar, are helping boost domestic farm sales.\nActivity in the energy sector was expanding. The number of active drilling rigs increased in the Atlanta, Kansas City, and Dallas Districts. Although producers are interested in returning to the Gulf of Mexico, drilling remains well below pre-oil spill levels as permit issuance lags. Producers in Kansas City expressed concern about future production due to labor and equipment shortages. Cleveland reported an increase in production from Marcellus shale. In the Minneapolis District, wind energy continued to expand, but at a slower pace than a year ago, while mining activity increased.\nLabor and Prices\nHiring activity showed some improvement across most Districts, although employers are waiting for clearer signals of expanding business prospects before adding significantly to payrolls. A preference for part-time and temporary workers was reported in the Atlanta and Chicago Districts. Seasonal hiring in retail trade is expected to be higher this year in Chicago and San Francisco than in the previous two years. Employers in the Boston, Richmond, and Minneapolis Districts reported having difficulty finding skilled workers. Employment agencies in the New York, Richmond, and Chicago Districts reported a moderate increase in new job openings, while staffing firms in Dallas said that hiring activity is strong. Boston staffing contacts noted that labor demand has strengthened, particularly in the information technology, medical, manufacturing, and legal sectors. Wage pressures remain subdued across Districts. Contacts in Richmond and Kansas City noted that they expect little change in wage pressures during the upcoming months. However, employers in San Francisco reported significant increases in employee benefit costs.\nPrices of final goods and services were fairly stable across Districts despite rising input costs, especially for agricultural commodities, metals, and fuel. Companies in the Atlanta, Chicago, Kansas City, and San Francisco Districts reported a limited ability to pass through higher input costs to customers given the relative softness in demand. However, some manufacturers in the Boston, Cleveland, Atlanta Districts have announced plans to raise their product prices in the near future. Retailers in Philadelphia and San Francisco noted price increases on selected products imported from Asian countries. Reports from the Chicago and Dallas Districts indicated that that record-high inventories and forecasts for a warmer-than-normal winter are putting downward pressure on natural gas prices.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Dallas

/beige-book-reports/2010/2010-12-da

"Beige Book Report: Dallas\nDecember 1, 2010\nThe Eleventh District economy expanded at a modest pace over the past six weeks. Activity in the energy sector strengthened, and transportation services and staffing firms reported steady but solid demand. Retailers said apparel sales were slow due to unseasonably warm weather, while reports from the manufacturing sector were mixed. Activity in the housing market remained sluggish but conditions improved slightly in commercial real estate. Overall lending conditions were largely unchanged. Most respondents expect slow growth in the near term.\nPrices\nSelling prices and fees held steady at most responding firms due to competition and low sales activity, but there were some reports of increases. Small parcel shipping prices rose slightly while large parcel shipping prices increased sharply, according to contacts. Fabricated metals producers noted selling prices edged up in response to higher steel prices and primary metals manufacturers reported price increases were becoming necessary to offset higher cost of aluminum and other industrial metals. Agricultural respondents said crop prices increased across the board, and staffing firms reported upward movement in billing rates. Improved demand has enabled railroads to raise prices across various business units.\nThe price of crude oil rose moderately on stronger demand from China and a weaker dollar. On-highway prices of both diesel and gasoline increased. Natural gas prices remained weak as mild weather, record-high inventories and forecasts for a normal winter put downward pressure on prices. Solid demand, tight supplies, and multiple plant outages led ethylene producers to push through a 4 cent increase in contract prices for October, and spot prices rose sharply in response.\nLabor Market\nEmployment levels held steady at most responding firms, and there were scattered reports of hiring. Staffing firms continued to report strong hiring activity in the region, and noted that they were adding workers in response. Some contacts in the airline, transportation services, automobile sales and transportation manufacturing industries added workers, and retailers were starting to ramp up hiring for the holiday season. Layoffs remained limited. Wage pressures were minimal, with the exception of reports of higher wages in the airline industry.\nManufacturing\nDemand for construction-related products was flat over the past six weeks, but a few manufacturers said sales rose due to an uptick in multifamily housing activity. Contacts expect conditions to remain weak or improve slightly in 2011 due to continued weakness in residential and commercial real estate. Fabricated metals producers saw a sharp increase in demand over the past month due to seasonal factors and government-related project work.\nMost high-tech manufacturers said growth in orders and production continued at a much slower pace than in the first half of the year. Sales of some consumer products such as personal computers and laptops slowed, but demand for gaming products and smart phones remained strong. Several respondents expressed concern about reduced demand from the public sector as governments at all levels were faced with large revenue shortfalls. Still, most respondents expected conditions to remain stable for the next three months.\nDemand for paper products held steady. Food manufactures said growth in orders was stable over the reporting period, and the three-month outlook for sales was positive. Trailer manufacturers reported a slowdown in demand. Contacts in aircraft parts distribution and manufacturing saw an increase in demand due to higher utilization of aircraft fleets and deferred maintenance work.\nDemand for petrochemicals was solid. Ethylene and polyethylene producers reported that domestic demand increased moderately, and export demand stayed strong--driven by cheap natural gas versus relatively expensive oil and a weaker dollar. Domestic orders for PVC used in residential and commercial construction remained depressed, but exports were strong, according to contacts. Demand for petrochemicals used in manufacturing, alumina, pulp and paper improved.\nRefiners said conditions remained weak. Demand for oil products continued to decline and refiner margins were being squeezed by the rise in oil prices. Refinery utilization rates stood just above 80 percent, down from 90 percent this summer.\nRetail\nEleventh District retail sales grew modestly, despite unseasonably warm weather that impacted apparel sales for much of the reporting period. In recent weeks, however, clothing retailers noted sales improved as temperatures fell to more normal levels. Two large retailers said that their sales in Texas outperformed those nationwide. Inventories increased slightly due to the warm weather and some seasonal buildup. The retail environment remains extremely competitive, and contacts say they still have to lure consumers with promotions. Expectations are for the holiday shopping season to yield moderate year-over-year sales increases. Contacts expect continued improvement in 2011, although most expect the pace to be slow to moderate.\nAutomobile sales were slightly weaker over the reporting period, by more than normal seasonality would suggest. Inventories rose, but remain at healthy levels, according to contacts. A typical slowdown in sales is expected heading into the holiday season, but the outlook for next year is cautiously optimistic, with most contacts predicting modest growth in sales.\nServices\nStaffing firms reported steady demand, and noted that activity was stronger than expected. Demand continued to be broad-based, with particular strength reported for oil field operations, administrative and professional services, plastics and steel manufacturing, and automobile-related positions. Direct placements, which had been subdued so far this year, increased during the reporting period. Sustained high levels of demand continued to boost the near-term outlook.\nAccounting firms said some increase in consulting and merger and acquisition work has kept demand stable. Uncertainty regarding impending tax legislation continued to constrain demand for transactional services, but contacts were generally optimistic about year-end earnings. Demand for legal services remained soft. The only area of increased activity is mergers and acquisitions. Legal firms say they are in a better position than last year, but remain cautious in their outlooks.\nTransportation services demand was positive. Intermodal transportation firms noted a wide-spread increase in cargo volumes was buoyed by demand from international clients. Railroad contacts said continued solid gains in volumes boosted revenues. International container trade volumes rose slightly during the past four weeks, and contacts expect a modest pickup in container traffic next year. Firms that ship small parcel goods said growth in volumes flattened during the reporting period, but remained above year-ago levels. Airline traffic was steady over the past six weeks. Contacts noted that conditions are much better than a year ago, and the outlook is for modest growth in the near term.\nConstruction and Real Estate\nHousing markets remain sluggish. Builders said sales weakened slightly in October after some firming in August and September that followed the homebuyer tax-credit drop off. While entry-level builders were said to be struggling, builders in the move-up price range have weathered the post tax-credit conditions better, according to contacts. Realtors also said the higher end of the market is selling better, a reversal of the late 2009 and early 2010 trend. Prices were up slightly from year-earlier levels. Respondents said lenders still require a 20 percent down payment in most cases, which may be more difficult for the entry-level homebuyer. Outlooks are for sales and building activity to remain slow in the near-term.\nApartment demand continued to rise steadily during the reporting period, and occupancies edged up. Rents are moving up, according to contacts. Construction activity remains low by historical standards, but it has picked up slightly in recent weeks. Investment activity for multifamily properties has risen since the last report.\nOffice leasing continues to edge up, which is \"giving people a little more confidence,\" according to contacts. Respondents in the industrial sector also noted increased lease deals, but said rents are near historic lows. Excess space and tight credit conditions have limited nonresidential construction. Investment activity remains subdued, but contacts say recent signs of economic improvement should enable more risk-taking in the near term.\nFinancial Services\nFinancial firms reported a slight pickup in demand for selected loan types and a continued tapering off for others, noting that demand remained very price sensitive. Consumer loan growth was modest, but dependent on low rates. Demand for commercial and industrial loans increased, although real estate loan demand continued to decline. Overall credit quality was stable; however, mortgage delinquencies and mortgage bankruptcies remained elevated. Financial contacts noted continued pricing pressure, particularly for consumer and good-quality business loans. Deposits were stable. Outlooks improved modestly, but contacts anticipate loan growth to remain sluggish because of economic and public policy uncertainties, as well as borrowers' poor credit ratings.\nEnergy\nThe Eleventh District rig count rose strongly over the past six weeks. The disparity between oil and natural gas prices continued to drive the trend toward more oil-directed drilling. U.S. land drilling is the strongest and most profitable segment of the industry, especially activity tied to horizontal drilling. Contacts expect the overall rig count to level off or increase at a slower pace through year-end as the decline in dry natural gas activity is not being offset by increased oil-directed drilling. Producers are interested in returning to the Gulf now that the moratorium is over, and are working their way through the new regulations and their cost implications. Service companies are maintaining the skills and capacity to go back to the Gulf, but do not expect it to happen before early next year.\nAgriculture\nTopsoil moisture was short in several parts of the District, and moderate drought conditions prevailed in East Texas and along the Rio Grande. Ranchers were concerned that lack of rainfall was hampering winter grazing and hay production. Higher grain prices boosted margins for farmers but increased feed costs for livestock producers. Cotton prices were at record-high levels, and estimates for Texas cotton production put this year's crop near historic highs for the state. Demand for agricultural products remained strong, with particularly robust export demand for cotton and beef.\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/2010/2010-12-ny

"Beige Book Report: New York\nDecember 1, 2010\nThe Second District's economy has continued to expand since the last report, with noticeable improvement in the labor market, while prices have remained stable. Non-manufacturing contacts overall report steadily improving business conditions, whereas manufacturing-sector contacts report a recent pullback in activity; even so, respondents in both sectors indicate that they continue to add workers, on balance, and plan to do so in the months ahead. Similarly, a major employment agency notes some pickup in hiring activity. General merchandise retailers report that sales have improved steadily in October and early November, while auto dealers continue to report fairly good sales results. Tourism activity in New York City has shown signs of picking up in recent weeks. Consumer confidence has also moved up modestly. However, commercial and residential real estate markets have been steady to softer since the last report. Finally, bankers report steady loan demand, tightening credit standards, and some increase in delinquency rates on home mortgage loans.\nConsumer Spending\nRetailers report that sales have picked up steadily since September: overall, sales were characterized as roughly on plan in October and ahead of plan through early November. One major retail chain attributed part of the recent pickup in sales to the arrival of cold weather in November, after an unseasonably mild October. A large mall in western New York State reports that traffic has been brisk and that customers--particularly from Canada--have been leaving with many shopping bags. A contact at another major mall in upstate New York notes that sales slowed in October and were down slightly from a year earlier but picked up in the first half of November. Most retail contacts in New York state indicate little, if any, discernible effect from the October 1st reinstatement of the sales tax on clothing priced under $110. Inventories are generally reported to be at favorable levels, and prices continue to be steady, though one large chain anticipates some increase in merchandise price pressures starting next spring. Most retail contacts indicate that they are hiring slightly more holiday-season workers than in 2009; one contact notes that there have been more applicants for these temporary jobs this year. Auto dealers in the Rochester area report that sales of new autos were up roughly 12 percent from a year ago in October and are running 5 to 10 percent ahead in November. Low inventories are no longer a problem, because auto production has recovered to a more normal level. Retail credit conditions have continued to ease, and wholesale credit markets have shown steady improvement.\nTourism activity in New York City has been strong since the last report. Manhattan hotels report that occupancy rates continued to hover around 90 percent in October and remained higher than a year ago in November; room rates continued to edge up since the last report and were running 7 to 8 percent ahead of a year ago. While leisure visits to New York City are described as steady and robust, business travel has strengthened steadily. Broadway theaters report a pickup in both attendance and total revenues in late October and early November: after a dip in September and early October, business is, once again, running ahead of a year earlier.\nConsumer confidence, though still at low levels, has improved modestly since the last report. The Conference Board reports that consumer confidence among residents of the Middle Atlantic states (NY, NJ, PA) rose in September and October, reversing a decline in August. Similarly, Siena College's latest survey of New York State residents shows confidence rising to its highest level since May both upstate and in the New York City area.\nConstruction and Real Estate\nHousing markets across the District have been steady to softer since the last report, with some of the ongoing weakness at the lower end of the market attributed to the mid-year expiration of the home-buyer tax credit. In general, prices have drifted down across much of upstate New York and in northern New Jersey since mid-year, while prices in New York City remained relatively steady. Buffalo-area Realtors report that the housing market weakened somewhat in October through early November, particularly for lower-priced homes; sales activity has slowed, and the supply of homes on the market has increased. Similarly, a contact in northern New Jersey reports that market conditions remain sluggish: sales activity remains low and is still largely composed of distress sales, and prices are still said to be edging down.\nActivity in New York City's co-op and condo market has slipped by a bit more than the seasonal norm in October and early November, particularly at the lower end of the market, though a recent flurry of activity is reported at the very high end (homes in the range of $8 million or more). Prices remain stable across the spectrum. While the number of new condos under construction has declined modestly, there continues to be a substantial inventory of unsold, completed units. Manhattan's rental market has reportedly softened a bit since the last report. Rents remain stable, but landlords are, once again, offering concessions (such as one or more month's free rent), though these discounts are not as steep as in 2009. A substantial amount of new housing in the pipeline is likely to be offered as rentals.\nOffice markets across the District have been steady to slightly softer thus far in the fourth quarter. Asking rents held steady in Manhattan and slipped in northern New Jersey, Long Island and Rochester but rose modestly in Westchester and Fairfield counties and in Buffalo. Vacancy rates have been steady to modestly higher since the last report. Sales of commercial properties remain sluggish, and a contact in upstate New York reports that commercial construction activity remains at depressed levels.\nOther Business Activity\nA major New York City employment agency, specializing in office jobs, reports that the job market has picked up a bit since the last report, with some increase in hiring activity at both financial and legal firms; other areas, such as publishing remain sluggish. The pool of job applicants, though still large, appears to be shrinking a bit. More broadly, non-manufacturing firms in the District report increasingly widespread hiring activity, as well as business conditions generally; these contacts also remain optimistic about prospects for the early part of 2011.\nOn the other hand, manufacturing activity has weakened, on balance, as a number of firms saw slower activity and fewer contacts reported improvements. Yet these contacts continue to report that they are increasing employment, on balance, and they are increasingly optimistic about the near-term outlook. Also, manufacturing contacts indicate that they are currently holding somewhat higher cash balances than usual, and a sizable proportion of contacts indicate that they plan to increase cash holdings over the next year. Both manufacturers and other firms report moderate increases in prices paid but little or no change in their selling prices.\nFinancial Developments\nSmall to medium-sized banks in the District report steady loan demand across all categories, although they see some increase in the demand for refinancing. Respondents report a tightening of credit standards for all loan categories: the percentage of bankers reporting tightening credit standards ranged from 11 percent for residential mortgages to 18 percent for commercial and industrial loans. No banker reported an easing of credit standards in any of the categories. Bankers report narrowing spreads of loan rates over costs of funds for all loan categories--most notably in the commercial and industrial loan category. Respondents also indicate widespread decreases in the average deposit rate. Finally, bankers report rising delinquency rates for residential mortgages but little or no change in other categories.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Philadelphia

/beige-book-reports/2010/2010-12-ph

"Beige Book Report: Philadelphia\nDecember 1, 2010\nBusiness activity in the Third District has been varied across sectors since the last Beige Book. Manufacturers, on balance, reported increases in shipments and new orders in November. Retailers have been making year-over-year gains in sales. Motor vehicle dealers have also posted year-to-year sales increases. Third District banks reported practically unchanged loan volume outstanding since the last Beige Book. Residential real estate agents and homebuilders indicated that the recent sales trend has been downward. Contacts in the commercial real estate sector said market conditions remain soft. Service-sector firms reported that activity has been roughly steady in the past month. Business contacts indicated that prices of most goods and services have shown no change, although retailers noted recent increases in prices for goods ordered from foreign suppliers.\nMost Third District business contacts foresee slow improvement ahead. Manufacturers forecast a rise in shipments and orders during the next six months. Retailers expect sales for this year's holiday shopping period to exceed sales for the same period last year. Bankers expect just slow growth in lending in the next few months. Contacts in residential real estate expect activity to move up slowly, at best, but contacts in commercial real estate do not anticipate a meaningful change from current soft conditions in the near future. Service-sector companies expect slow growth from now into next year.\nManufacturing\nThird District manufacturers reported increases in shipments and new orders from October to November, on balance. However, the improvement was uneven among the region's major manufacturing industries. Increases in demand for their products was more common among makers of furniture, industrial materials, and testing and measuring instruments, but makers of construction-related goods continued to see flat or declining demand for their products. Manufacturers in general continued to report that the flow of new orders has been variable. One said, \"You don't know from one week to the next what the workload will be.\" Another said, \"Conditions continue to be choppy.\"\nThird District manufacturers expect business conditions to improve during the next six months, on balance. Among the firms surveyed in November, about half expect increases in new orders and shipments, and about one-fifth expect decreases. Capital spending plans among area manufacturers have increased somewhat in recent months, although many noted that implementation of new plant or equipment is primarily to replace obsolete equipment, increase efficiency, or meet pollution control requirements. Several firms said they will not expand production facilities until they get orders they are unable to fill with their current capacity.\nRetail\nThird District retailers generally reported small-to-moderate year-over-year increases in sales in October and early November. Gains appeared to be relatively greater for apparel than other product lines, according to area merchants. Store executives said discounting has been widespread to stimulate sales of fall and holiday merchandise, and the recent sales pace has mostly met expectations. \"Consumers are definitely responding to low prices,\" one contact said. Looking ahead, most of the retailers surveyed for this report said they expect sales to continue to move up through the end-of-year shopping period, but some noted that, due to discounting, they will have to sell more merchandise than last year to meet dollar-sales targets.\nThird District auto dealers reported rising sales and improved profitability since the last Beige Book. Inventories were generally described as appropriate for the current sales rate. Dealers expect sales to rise until the end of the year, but some expressed concern that the sales pace might slip during the first quarter of 2011, after the better than expected results of 2010.\nFinance\nTotal outstanding loan volume at most of the Third District banks contacted for this report has been flat since the last Beige Book, with practically no change in any credit category. Bankers continued to report low demand for both consumer and business loans. Commercial bank officers generally indicated that credit quality measures have been roughly steady. However, one noted that \"there is continued stress in the commercial real estate and construction portfolio.\"\nAccording to the Third District bankers surveyed for this report, the outlook is that there will be only slow growth in lending to both consumers and businesses in the months ahead. Although bankers in most parts of the District believe economic conditions are improving gradually, they do not expect a parallel rise in loan demand. And one banker expressed concern that economic recovery will come too slowly to reverse deteriorating financial conditions among some local firms.\nReal Estate and Construction\nIn most parts of the Third District, residential real estate activity has slowed since the last Beige Book. Residential real estate agents generally indicated that sales of existing homes have been declining and that inventories have edged up. Most of the residential builders contacted for this report also said sales have been on a downward trend. Sales of higher-priced homes have been slower than sales of lower-priced homes in most areas. Home prices have been flat to down in most markets, although contacts noted that the rate of price decline has eased recently. Residential real estate contacts expect sales to remain slow until economic conditions improve. The widely shared view among agents is that \"the real estate market will not come back until there are more jobs,\" as one contact said.\nNonresidential real estate firms indicated that there has been little change in conditions in commercial and industrial markets since the last Beige Book. Contacts said that vacancy rates and rents have been nearly steady, although there have been increased reports of landlord concessions. Several contacts reported that tenants have been taking advantage of lower effective rents, resulting in increased leasing activity and relocations, but no increase in leased space. Some contacts noted recent signs of growing investor interest in apartment buildings and some Class A office buildings, but retail buildings continued to be out of favor. The pace of commercial construction remains slow, although there have been some recent increases in renovation and remodeling activity. Commercial real estate contacts expect current market conditions to persist. \"Next year will be a lot like this year,\" one contact said. Building owners and agents agree that a significant increase in demand for commercial and industrial space will not take hold until employment begins to grow more strongly.\nServices\nService-sector firms gave mixed reports, but on balance activity has been roughly steady since the previous Beige Book. Contacts said the health care and information technology sectors were showing some growth, but service-sector activity related to real estate, construction, and finance was flat to down. Also, some firms that provide services to governments indicated that their clients were making less use of their services as part of overall budget tightening. Looking ahead, most of the service firms contacted for this report expect only slow growth. One said, \"We don't expect much improvement next year.\" Another said, \"We will have to look to new markets for growth.\"\nPrices and Wages\nReports from manufacturers since the last Beige Book indicated some increases in raw material costs, but mostly steady output prices. Goods mentioned as rising in price were food products, metals, and electrical equipment. Retailers generally noted that most wholesale costs and retail prices have been steady, but some contacts reported that foreign suppliers, especially in Asia, have raised the prices of many products being ordered now for delivery next year.\nBusiness firms in the region reported no major changes in wages since the last Beige Book. Employers generally reported that they were not having difficulty filling positions at current compensation levels. However, some said they were becoming somewhat concerned that sufficient numbers of qualified workers will be more difficult to obtain when they do decide to increase staffing levels.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Cleveland

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"Beige Book Report: Cleveland\nDecember 1, 2010\nOn balance, economic activity in the Fourth District grew at a modest pace during the past six weeks. Manufacturers reported some improvement in new orders and production. Car sales increased, while general retailing was flat to down slightly. Freight carriers saw a small rise in volume, and energy companies reported stable production. Residential and nonresidential construction remains sluggish. Demand for business loans showed some signs of a pickup, while consumer borrowing was weak.\nReports of rising payrolls in manufacturing, banking, and auto dealerships increased slightly since our last survey. Overall, staffing-firm representatives noted little change in the number of new job openings, with vacancies concentrated in the healthcare sector. Wage pressures continue to be contained. Apart from volatility in commodity prices, raw materials and product pricing were fairly steady.\nManufacturing\nReports from District factories indicated that new orders and production were either stable or rose modestly during the past six weeks. Production was higher on a year-over-year basis, with many contacts experiencing double-digit increases. Several manufacturers commented that opportunities continue to grow at a faster pace in offshore markets than domestically. In general, manufacturers are cautiously optimistic and expect at least modest growth during 2011. Steel producers and service centers reported that volume was either flat or improving, with shipments being driven by energy-related, auto, and heavy equipment industries. Two respondents commented that they are experiencing some difficulty filling orders due to capacity constraints and long lead times. Most steel executives we spoke with expect business activity to follow seasonal trends in the near term. Looking forward to the remainder of 2011, they anticipate modest growth at best. District auto production showed a moderate rise during October on a month-over-month and year-over-year basis.\nCapacity utilization is trending up for some manufacturers and steel producers, while the majority said that utilization rates still remain below pre-recession levels. Inventories are balanced with incoming orders. Although there has been some increase in capital outlays, most producers are conservative in their planning. Several noted that new spending will be directed at their offshore facilities. Other than volatility in steel and commodity prices, the cost of raw materials has been relatively stable. Several manufacturers announced selective product price increases to reflect changes in steel, copper, and agricultural input prices. We heard a few reports that these adjustments are expected to become more widespread in 2011. About half of our contacts told us that they have expanded their payrolls slightly since our last report. Wage pressures are contained.\nReal Estate\nNew home construction was generally flat at a low level during the past six weeks, with several builders reporting no sales. General contractors expect construction to remain sluggish going into the new year and their outlook for the remainder of 2011 is uncertain. Most new home sales are occurring in the move-up buyer categories. Spec inventories are intentionally being kept at low levels, and those who want to build have difficulty obtaining financing. A majority of our contacts reported lowering the list prices of their homes. Construction material costs have shown little movement since our last report. We have been hearing an increasing number of reports about subcontractors and building material suppliers going out of business. General contractors continue to work with very lean crews.\nDiscussions with nonresidential builders drew mixed responses. A majority of our contacts reported having less work than a year ago and seeing a slowdown in inquiries. Several builders characterized their backlogs as acceptable, but noted that they were down year-over-year. New projects are generally falling into the infrastructure category. The general consensus is for little change in business conditions in the near term. On balance, construction material prices have been stable. Two general contractors reported reducing their payrolls, while other builders said employment was steady. Subcontractors are still struggling and bidding at very competitive rates. Reports indicate that it is very difficult for subs to obtain credit.\nConsumer Spending\nRetail sales for the period from mid-September through mid-October were flat or down slightly when compared to the previous 30-day period. The exception was food retailing, where sales showed a modest improvement. When compared to year-ago levels, most retailers said that sales volume was similar or had increased. A few of our contacts noted that consumers have postponed buying cold-weather items. Expectations call for sales to improve somewhat through year\u00e2\u20ac\u2122s end, reflecting the holiday shopping season. Households remain price sensitive and tend to purchase items only as needed, focusing more on necessities. Several retailers saw modest price increases from their suppliers, which they passed through selectively to customers. Half of our contacts plan to increase capital budgets in 2011, mainly for new stores and warehousing. Hiring will be limited to temporary holiday workers.\nMost auto dealers saw a pickup in new vehicle sales during October on a month-over-month basis. Looking forward, dealers expect sales to follow seasonal trends through the winter months. However, they anticipate that volume will be higher than the prior year\u00e2\u20ac\u2122s level. New car inventories rose during the past few weeks. Used vehicle purchases are flattening out since our last report. Little change in lending standards was reported, while credit pricing remains very competitive. We heard a few reports of incremental hiring at dealerships.\nBanking\nBankers reported commercial loan demand was stable or showed modest growth since our last survey. Demand was driven primarily by companies in the energy, healthcare, and manufacturing sectors. Demand also came from firms seeking financing for mergers and acquisitions. On the consumer side, conventional loan demand remains weak, although several bankers reported that they are beginning to see early signs of growth. Consumer activity is strongest in indirect auto lending and home equity lines of credit. We heard a few reports that households are relying more heavily on debit cards and are bypassing credit, even if it means postponing a purchase. Interest rates for business and consumer credit moved by only a few basis points, with a slight bias to the downside. Most of our contacts said that the demand for residential mortgage refinancing remains strong, while new-purchase mortgage originations are weak. Mortgage rates are stabilizing at historic lows. Core deposits continue to grow, with most of the growth occurring in nonmaturing products. Credit quality was generally characterized as either stable or showing a slight improvement, especially for business applicants. In total, delinquency rates are stable or trending down. However, delinquencies in some residential mortgage portfolios, though manageable, are either high or rising slightly. Several bankers reported that they have slowly increased their payrolls during the past few months, though some existing positions are being converted from full-time to part-time.\nEnergy\nReports indicate that oil and gas output from conventional wells was fairly steady during the past six weeks, with output expected to remain at current levels in the near term. Production from Marcellus shale was somewhat higher and is expected to continue to increase. Spot prices for natural gas are generally flat at a low level, which is putting downward pressure on capital spending. Oil prices continued on a slow upward trend. Coal production has been stable since our last report, with little change expected in the near term. However, one energy executive noted that international demand for coal is rising as an economic recovery in Europe builds momentum and traditional supply sources are being drawn to Asian markets. Spot and contract prices for coal were mixed but are tending to the down side. Other than a rise in fuel prices, equipment and material costs have been flat. Employment at energy companies has not changed recently.\nTransportation\nFreight transport executives reported that volume generally showed a modest increase during the past six weeks. Chemical shipments rose, while a decline was seen in apparel and building materials. Several carriers characterized their outlook as cautious, with some expectation for a slight drop in volume due to seasonal factors. Almost all of our contacts reported rising prices for fuel, with limited success at passing the increase through to customers. Capital outlays are expected to remain at relatively low levels until the pace of the recovery picks up. Although pent-up demand exists to replace aging equipment, high prices for new tractors and tight credit are limiting purchases. Two of our contacts said that they are now leasing equipment because of attractive rates. Wage pressures are beginning to emerge due to a growing problem with driver turnover and 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"

Richmond

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"Beige Book Report: Richmond\nDecember 1, 2010\nFifth District economic activity increased at least moderately in most sectors since our last assessment. Manufacturing continued to receive upbeat news from contacts, with many reports of strengthening orders and shipments. Services firms reported mostly stable-to-improving demand, after several months of declines. In addition, bankers noted slight improvements in most areas of lending, and tourism picked up, led by gains in the Baltimore area. Labor markets experienced an increase in both temporary and permanent hiring, especially in the manufacturing sector. Harvests around most of the District were successful, and farm income projections were revised higher. On the other hand, there were a few weak indicators. Activity in both residential and commercial real estate markets was soft, although house-shopping traffic improved in some areas. Retail activity overall continued to contract, with declines of some big-ticket items. Price pressures were generally restrained.\nManufacturing\nManufacturing activity picked up in October and November after a slight easing in September. An auto-parts supplier in the District said that auto manufacturers continued to increase orders. He also mentioned that capital expenditures, which had previously been on hold, were recently approved. A packaging manufacturer reported strong demand, and a machinery equipment industry spokesman said that orders, led by autos and aerospace, have been rising this year from very low levels. Similarly, a custom fabricator reported a slight increase in incoming orders and anticipated a significant upswing in early 2011. A manufacturer of fuel pumps and dispensers described his sales as good this year, but feared that tough economic conditions will limit sales next year. Moreover, a plastics producer stated that, even though October was a high-volume month, he was not expecting further improvements until early next year. Survey contacts reported that raw materials and finished goods prices rose at a somewhat quicker pace than in our last report.\nRetail\nDistrict retail sales generally declined in recent weeks, although pockets of strength were reported. Several department store managers reported disappointing sales since our last assessment and their outlook for the holiday season was restrained. However, in the days leading up to Black Friday, a few contacts reported an increase in foot traffic and sales. Big-ticket sales were generally soft, with mixed reports from car and light truck dealers. While an automobile dealer in South Carolina attributed falling sales to the high unemployment rate in his area, a central West Virginia dealer said that he had \"a real good month.\" A recent boat show in Maryland drew over 90,000 visitors; sales were reported as robust and financing at low rates was widely available. In addition, grocery sales grew more rapidly than a month ago, according to survey contacts, and an executive at a chain hardware store in central Virginia told us customer traffic remained steady, but the amount customers were spending increased. Inventories flattened over the last four weeks, according to most respondents in our November survey, and retail prices rose moderately.\nServices\nBusiness activity at service-providing firms stabilized or accelerated since our last report. Most owners and managers at restaurants across the District reported an uptick in revenues, and several investment professionals said business had rekindled at their firms. In Richmond, a contact at a financial services firm said his clients' appetite for risk was returning. Even with improved client confidence, however, his firm was not able to increase profit margins. Education and healthcare contacts noted little change in revenues during recent weeks. \"Steady, close-to-budgeted demand\" for services was the report from an executive at a North Carolina healthcare system. A CPA in central West Virginia said the local economy remained \"pretty stagnant,\" but demand at his firm was steady. Prices at services-providing firms edged up slightly, according to survey findings.\nFinance\nLending activity in the District continued to post modest gains from weak levels since our last assessment, but there were also many areas with no improvement. Refinancing continued to dominate activity in the mortgage market, although several bankers around the District cited marginal improvements in new home loans. However, most loans were for homes in the low price range and often associated with foreclosures or short sales. Several loan officers for large regional banks reported a pickup in consumer lending activity--mostly for home improvement or purchasing and repairing bargain-priced homes. A banker in the Baltimore area stated that commercial loan demand started to increase in recent weeks, noting that many loans were to support new business, and a lender in South Carolina provided equipment financing to several local manufacturers. Financing of new commercial construction remained dormant, but a banker in the Baltimore area cited a modest increase in condo and apartment construction loans. Credit quality continued to improve, according to most bankers, even as non-performing loans and loan losses remained above normal. However, a loan officer in the Richmond area noted that delinquencies were moving back to normal levels.\nReal Estate\nIndicators of real estate activity around the District were mixed during the last month. Most Realtors continued to report limited sales activity, but several indicated that consumers have started to shop for homes again. A Realtor in South Carolina stated that an increase in layoffs in recent weeks contributed to slow home sales. In central Virginia, a real estate agent reported that, while the number of contracts was down recently, foot traffic had improved and prices had stabilized--even at the upper-price range. A Realtor in the D.C., area described sales activity as \"pretty good\" (up markedly from a year ago). However, a real estate agent in Northern Virginia said that October was \"a terrible month,\" although sales in early November were showing modest improvement. Several agents noted that more sellers in the market were opting instead to rent their properties. A Baltimore area Realtor stated that military families moving into the area as part of BRAC-related relocations were often renting rather than buying homes, dampening anticipated home price increases. A contractor in North Carolina told of an appraiser who had so much business that he was \"working seven days a week with no end in sight.\"\nCommercial real estate activity was generally weak since our last report, but property managers were becoming more optimistic about the near term. A Baltimore developer described commercial property demand as spotty, but he expected a pickup in demand from local \"feds, meds, and eds.\" A developer of residential complexes reported that his numbers have improved in recent weeks, but the volume of transactions remained extremely low. A commercial Realtor in North Carolina noted that rental rates were flat at low levels, but property owners were able to avoid making negative cash-flow deals. In contrast, the owner of an elevator repair service reported that businesses were spending again--partly to maintain safety standards, but also to modernize in anticipation of a pickup in business activity. A commercial architect said that he could now \"see light at the end of the tunnel\" and was able to proceed with several projects that had been on hold for well over a year. A contact in the D.C., area said that architectural firms were hiring again. Nonetheless, most contractors continued to report no speculative building, and a contractor in central Virginia said that his region had only a few closings for new construction (mostly government projects).\nLabor Markets\nHiring activity picked up moderately since our last report, but employment agencies were uncertain whether the gains would continue into December. Several sources reported increased hiring of production and assembly workers. A supplier of ball bearings stated that his company recently started to hire, after postponing the decision over concern about the sustainability of improving demand. A machinery equipment industry spokesman reported that hiring was up, but mostly limited to filling empty positions. The tourism industry along the District's east coast added employees, according to one contact, but mostly for temporary workers. A major retail chain store representative said that hiring activity had been ongoing, but most likely would be down in December when compared to a year ago. Several contacts at employment firms reported that demand for assembly line workers was somewhat stronger than a month ago, although the contacts were evenly split about whether the gains would continue into December. An agency manager in South Carolina expressed concern about a slowdown in hiring during the holiday season. Contacts continued to report that skilled workers were hard to find, but that wage pressures were subdued and little change was expected over the next few months.\nTourism\nAssessments of tourist activity were mostly positive since our last report. A financial analyst reported that tourism in the Baltimore area was \"robust\" in recent months, and a port official there noted that Europeans were flying into Baltimore to take advantage of recently added cruise lines. A Myrtle Beach contact characterized tourist activity as somewhat stronger, compared to a year ago, which he attributed to increased weekend traffic. A manager at a mountain resort in Virginia also described tourist activity as somewhat stronger, which was due to great weather coupled with beautiful fall foliage. That contact also mentioned that the resort had attracted a more affluent crowd who normally spends more on food and recreation. Restaurants did better in October and November than in the summer months, and golf courses had more players than usual for the fall season. However, contacts from the Outer Banks of North Carolina and Virginia Beach reported little change in bookings in recent weeks. Several added that discretionary retail spending by tourists was down and vacationers were looking for exceptional deals at restaurants and recreation venues.\nAgriculture\nDry and cool temperatures allowed Fifth District farmers to make steady progress in harvesting and in small grain plantings, and farm income projections increased since our last report. Corn harvested for grain was 100 percent complete in Maryland and was winding down in West Virginia, according to reports, with farmers in those states reportedly pleased with yields. The corn harvest in Virginia had neared completion, with local producers expecting low yields due to extremely dry weather. In both North and South Carolina, the cotton harvest was ahead of schedule. In addition, small grains had been planted and were off to a good start throughout the District. Results of our recent agricultural credit conditions survey indicated that income projections strengthened somewhat as a result of continued higher commodity prices and stronger demand. However, lower yields and crop quality were expected to have an impact on producers' financial positions.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Chicago

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"Beige Book Report: Chicago\nDecember 1, 2010\nEconomic activity in the Seventh District increased at a slightly faster pace this reporting period. Retail and manufacturing contacts were more optimistic about the outlook for the rest of the year and early 2011, while construction and financial contacts remained cautious in their assessment. Consumer spending rose moderately, and business spending continued to increase at a steady pace. Manufacturing production also increased, while construction was limited outside of highway and bridge work. Credit conditions were slightly improved. Cost pressures rose, but there was limited pass-through to downstream prices. Wage pressures remained moderate.\nConsumer Spending\nConsumer spending was up moderately from the previous reporting period. Retail sales excluding autos increased in October and early November. Consumers continued to spend mostly on essentials, but contacts noted that discretionary and impulse spending were returning slowly. The best selling items again were those most heavily promoted and discounted like apparel, electronics, appliances, and home improvement goods. Retailers also noted greater optimism for the holiday shopping season, with several reporting that they recently had made later-than-usual orders of big-ticket items in anticipation of Black Friday. Auto sales also rose, aided by increased incentives. Auto dealers indicated that inventory had returned to more comfortable levels, although a few again cited a limited supply of stronger selling models.\nBusiness Spending\nBusiness spending continued to increase at a steady pace from the previous reporting period. Capital spending on equipment and structures was little changed. Inventory rebuilding in manufacturing leveled off. However, heavy machinery rental fleets continued to expand, and higher-than-expected fall sales prompted retailers to expand inventories in advance of the holiday shopping season. Hiring was again mostly limited to manufacturers bringing on temporary workers. In contrast, a few manufacturing contacts also reported contemplating increasing the number of work shifts, a decision which would require hiring additional permanent employees. In addition, a staffing firm reported a modest increase in industrial temporary-to-permanent transitions. Outside of manufacturing, hiring in information technology, engineering, and healthcare remained strong; seasonal hiring in retail trade was greater than the prior year; and there was a small increase in demand for temporary office and clerical workers.\nConstruction and Real Estate\nConstruction activity was limited in October and early November. Elevated levels of unsold homes continued to be a drag on new residential construction and home prices. Home builders reported only a modest improvement in sales, with showroom traffic weak but conversion rates increasing. The availability of mortgage financing, particularly for condominiums, remained a constraint for homebuyers, although lower mortgage rates led to an increase in refinancing. Residential development of new properties was minimal, as builders were instead concentrating their work on existing distressed properties. Private nonresidential construction was again subdued, although contacts reported a small increase in industrial projects. Public construction, driven by highway and bridge work, remained strong.\nManufacturing\nManufacturing production continued to improve through October and early November. Contacts generally expressed a very positive outlook for manufacturing, pointing to recent indications of demand firming into early 2011. The fabricated metals, automotive, and heavy equipment sectors were again strong sources of growth in manufacturing. Steel production softened recently, but contacts noted that service center inventories remain lean and that order inquiries for January delivery had accelerated in recent weeks. Orders were also reported to be on the rise for metal fabricators in the automotive, oil and gas, and aerospace industries. Contacts in the automotive industry were relatively upbeat, expecting auto sales to continue to strengthen into 2011 with the retail segment gaining momentum. Freight tonnage and new orders for heavy trucks increased, with strong demand expected next year to replace an aging fleet. Heavy equipment manufacturers reported continued strength in the demand for earth-moving equipment abroad and a recent increase in domestic activity. In contrast, activity was mixed for manufacturers with ties to residential housing. Shipments of construction materials decreased, while shipments of appliances increased in advance of Black Friday promotions.\nBanking and Finance\nCredit conditions improved from the previous reporting period. Fierce competition for high-quality borrowers was indicated to be leading to aggressive terms and structures for business credit, although core business loan demand remained weak. In contrast, banking contacts reported an increase in demand for refinancing, merger and acquisition lending, and in agribusiness for working capital. Commercial real estate credit conditions were slightly improved, with CMBS issuance increasing and bank lending for distressed property investment edging up. Consumer lending also picked up a little in October and early November, although contacts worried that the weak labor market and potential end of extended unemployment insurance benefits would limit consumer spending in the coming months. Loan quality improved, increasing bank earnings, but contacts anticipated only modest asset growth in 2011 as business and household deleveraging was expected to continue.\nPrices and Costs\nCost pressures increased from the previous reporting period, but limited pricing power continued to constrain pass-through to downstream prices. Manufacturing contacts cited increases in industrial metals prices like copper, iron ore, and scrap steel; and mill lead times were also said to be rising. Energy prices were mixed. Oil prices moved up, but natural gas prices held at low levels with record storage and a forecast for a warmer-than-normal winter. Retailers also reported wholesale price increases, but most were accepting lower profit margins rather than attempting to pass them along to consumers. Wage pressures again increased only modestly.\nAgriculture\nFarm earnings were boosted by an early and large harvest. The District harvest should be the third largest ever for corn and the second largest for soybeans. Soybean yields set a record for the District. Corn yields were less than expected in Indiana, Illinois, and Iowa, but above average in Michigan and Wisconsin. This year's corn crop was of a higher quality. The new corn has been blended with last year's poor quality crop; grain elevators have been able to sell the blended crop, clearing out storage space. In addition, the low moisture content of harvested corn plus low natural gas prices have kept drying costs to a minimum. Dry weather allowed more time for field work compared with a year ago, and there were reports of shortages of fertilizer and equipment parts due to earlier-than-usual preparations for next year's crop. Prices for corn, soybeans, milk, hogs, and cattle were all above the levels of a year ago, particularly so for corn. Even with higher feed costs, margins for livestock producers remained positive.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

San Francisco

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"Beige Book Report: San Francisco\nDecember 1, 2010\nEconomic activity in the Twelfth District continued to edge up during the reporting period of mid-October through mid-November. Despite rising prices for selected commodities, price increases for final goods and services remained quite limited, and upward wage pressures were largely absent. Sales of retail items and services rose a bit further. Manufacturing activity in the District continued to expand on net. Sales of agricultural products were robust, and demand strengthened for providers of energy resources. Housing demand stayed subdued, and demand for commercial real estate remained weak but showed signs of life in a few areas. Financial institutions reported that lending activity was largely unchanged.\nWages and Prices\nPrice inflation was limited for most items. Contacts noted price increases for an assortment of raw materials, such as oil, wheat, and aluminum, and for selected products sourced from China, such as apparel. However, final prices for most retail items and service categories continued to be restrained by weak demand and widespread competition.\nUpward wage pressures were virtually nonexistent, held down by minimal demand for new employees and high unemployment in most parts of the District. However, contacts continued to point to significant increases in employee benefit costs, particularly for health care. Hiring plans for permanent employees remained quite limited in most sectors, although a few reports pointed to expectations for a larger surge of temporary holiday hires than in the past two years.\nRetail Trade and Services\nRetail sales rose further on balance but remained lackluster overall. Modest improvements in sales were reported for traditional department stores as well as discount chains, with the strongest gains again noted for moderately priced home and garden products. Sales were characterized as flat to down for grocers and for retailers of furniture and major appliances. Contacts generally anticipate that holiday season retail sales will exceed their levels from last year, with expected nominal gains ranging from 2 to 3 percent up to 5 to 7 percent. Reports on holiday inventories were mixed, with some contacts reporting continued lean inventories and others noting slightly elevated levels. New domestic and imported automobile sales improved further, spurred largely by rising demand for light trucks and vans. Sales of used vehicles were strong, but contacts noted that supply remained tight. Retail contacts reported that capital spending was quite limited and focused largely on labor-saving technologies.\nDemand for services firmed further. Sales expanded for providers of technology services, prompted in part by a focus on efficiency-enhancing software investments in most sectors of the economy. Demand for professional services, such as legal and accounting, held largely stable. Providers of energy services reported further demand growth from households and businesses. Travel activity improved further in much of the District, spurred by growth in business travel as well as tourism. Visitor volumes and hotel occupancy rates showed solid gains in Hawaii but were flat to down in San Diego.\nManufacturing\nDistrict manufacturing activity posted further gains during the reporting period of mid-October through mid-November. For makers of commercial aircraft and parts, growth in new orders for some aircraft combined with an extensive backlog to keep production rates at or near capacity. Demand grew further for manufacturers of semiconductors and other technology products, with reports highlighting rising sales, high levels of capacity utilization, and plans for expanded capital spending by some companies in the near term. Demand continued to tick up for metal fabricators, although production remained well below normal. Despite modest improvements in demand, elevated inventories caused petroleum refiners to further reduce their production activity. Sales remained anemic for manufacturers of wood products.\nAgriculture and Resource-related Industries\nDemand was robust for agricultural producers and improved on net for natural resources used for energy production. Final sales and orders rose for assorted crops and livestock products, and, other than price increases for livestock feed, reports indicated little change in input costs. Reductions in overseas yields due to earlier unfavorable weather conditions combined with the lower value of the U.S. dollar to boost sales for domestic producers of corn, wheat, and other food grains. Oil extraction activity rose somewhat, as robust demand growth from emerging markets along with modest improvements in domestic demand pushed up the price of oil. Extraction activity for natural gas was largely steady despite an ongoing decline in its price.\nReal Estate and Construction\nActivity in residential and nonresidential real estate markets generally remained unchanged at very low levels. The pace of home sales was mixed across areas of the District but appeared stable to down slightly on balance, despite improved affordability arising from low mortgage rates and past price declines. New home construction remained at exceptionally low levels, as sluggish sales and continued high rates of foreclosure caused the availability of new and existing homes to remain elevated. Demand remained weak overall in commercial real estate markets, and tenants in some areas continued to receive rent reductions and other concessions. However, further increases in leasing activity were noted for some major markets in the District, such as for technology companies in San Francisco, along with rising market values and improved availability of financing for investment transactions.\nFinancial Institutions\nDistrict banking contacts reported that loan demand was largely unchanged on balance compared with the previous reporting period. Demand for commercial and industrial loans inched up in some areas but remained restrained by businesses' cautious approach to capital spending. On the consumer side, loan demand appeared to weaken slightly, which contacts attributed in part to households' desire to deleverage. Lending standards remained relatively restrictive for business and consumer lending, and a few contacts pointed to ongoing struggles with credit quality for some banks.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Minneapolis

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"Beige Book Report: Minneapolis\nDecember 1, 2010\nSince the last report, the Ninth District economy grew at a firm pace. Consumer spending, tourism, services, manufacturing, energy, mining and agriculture saw increases. Commercial construction was mixed; residential construction decreased. Meanwhile, commercial real estate was weak, and residential real estate activity decreased. Labor markets showed some signs of strengthening, but wage increases were generally modest. Overall prices remained relatively level.\nConsumer Spending and Tourism\nConsumer spending increased since the last report. A major Minneapolis-based retailer reported that same-store sales in October were almost 2 percent higher than a year ago. Total September sales at a Minneapolis area mall increased 9 percent from a year ago, and early November traffic was steady, according to the mall manager. September sales at a North Dakota mall were up 6 percent compared with a year earlier, and recent traffic levels were strong, particularly on Veterans' Day. Luxury car dealerships in the Minneapolis-St. Paul area reported strong sales during the past few months. According to the University of St. Thomas Holiday Spending Sentiment Survey, household spending on holiday gifts is predicted to increase a surprising 6.8 percent in the Minneapolis-St. Paul area from last year. Preliminary results of the Minneapolis Fed's business outlook poll indicated that 30 percent of respondents expect consumer spending to increase in their communities in 2011, while 20 percent expect spending to decrease. In last year's poll, 18 percent expected increases in consumer spending, while 49 percent expected decreases.\nTourism activity increased. Minnesota deer hunting licenses sold through mid-November were up 2 percent from the same period a year ago. In South Dakota, nonresident small game hunting licenses sold through October were up 1 percent from the same period a year ago.\nConstruction and Real Estate\nCommercial construction was mixed across the District. In the Minneapolis-St. Paul area, commercial developers said activity was at a standstill. In contrast, the value of October commercial permits in Fargo, N.D., nearly doubled from low levels the same month a year earlier, while permits in Sioux Falls, S.D., increased 10 percent. Residential construction slowed. October permits in the Minneapolis-St. Paul area fell 13 percent in value from the previous October, while the number of permitted units increased. Permits fell slightly in value in Sioux Falls and were roughly flat in Fargo in October from a year earlier. In contrast, October permits increased by nearly a third in Rochester, Minn.\nCommercial real estate remained weak. Vacancy rates in Minneapolis-St. Paul were near record levels for office and industrial space, and very few large transactions were noted. A commercial real estate broker in Fargo described activity there as \"slow and steady,\" with few purchases but some recent large leasing deals. Residential real estate activity dropped due in part to problems closing transactions for bank-owned properties. October pending sales in Minneapolis-St. Paul fell 36 percent from the previous year, while inventories increased and prices were flat. Sales decreased slightly in Sioux Falls, but average prices increased.\nServices\nProfessional business services firms are optimistic about economic activity. Based on results from the business outlook poll and the business confidence survey, respondents from the services sector expect increased sales and capital investment in 2011. An information technology consulting firm expects to double its workforce over the next year due to unexpectedly robust demand.\nManufacturing\nManufacturing output was up since the last report. An October survey of purchasing managers by Creighton University (Omaha, Neb.) showed increases in manufacturing activity in Minnesota and South Dakota, and slight increases in North Dakota. Preliminary results of a November manufacturers survey by the Minneapolis Fed and the Minnesota Department of Employment and Economic Development indicated that manufacturing activity increased in 2010 from 2009 and that this trend is expected to continue through 2011. Based on results from the business outlook poll, manufacturers expect increased sales and capital investment in 2011.\nEnergy and Mining\nActivity in the energy and mining sectors increased since the last report. Mid-November oil exploration activity increased since early October. Wind energy is expanding across the District, but at a slower pace than a year ago. Strong prices were noted for District mining commodities, and District mines were operating at near capacity. In Minnesota, October iron ore production increased slightly from September.\nAgriculture\nAgricultural activity saw large harvests and solid prices. Because of nearly ideal weather conditions, the harvest was completed early. Large yields and production were noted for most district crops. The U.S. Department of Agriculture raised its price estimates for corn and soybeans. The Minneapolis Fed's third-quarter (October) survey of agricultural credit conditions indicated that most lenders expect overall agricultural income and spending to be higher in the fourth quarter.\nEmployment, Wages, and Prices\nLabor markets showed some signs of strengthening. A semiconductor firm recently announced plans to hire 300 more employees in Minnesota as part of a factory expansion. Employment gains were also reported in Great Lakes grain shipping. A representative of a temporary services firm noted that it is becoming more difficult to find talented workers in information technology, skilled trades and health care. In the Upper Peninsula, a manufacturer noted difficulty finding technical and welding workers. According to the business outlook poll, 34 percent of respondents expect to increase employment at their own firms during 2011, while 8 percent expect decreases. In last year's poll, 14 percent of respondents expected to increase staff, while 45 percent expected to lay off workers. In contrast, a Minnesota wind tower maker laid off 110 workers, and an information management firm will lay off 60 workers. A health insurance company in Fargo was laying off 63 people.\nWage increases were generally modest. A contact in the information technology sector said that he expects continued depressed wage levels in software development. In contrast, pressure on wages in oil-producing areas of western North Dakota and eastern Montana had some fast food restaurants offering as much as $13 per hour with signing bonuses.\nPrices remained relatively level with some exceptions noted. Mid-November Minnesota gasoline prices were about the same as early October, but diesel fuel prices increased. A Minnesota-based food producer recently announced price increases for some of its cereals and baking products due to increased commodity and grain expenses. A bank director noted that fertilizer prices have increased over the past few months.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Boston

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"Beige Book Report: Boston\nDecember 1, 2010\nBusiness activity in the First District continues to expand gradually. Contacts in manufacturing, software and IT services, staffing, and commercial real estate seem more upbeat than six or 12 weeks ago, while retailers continue to give mixed reports, and residential real estate markets remain soft. Labor demand is improving somewhat, with most contacted sectors undertaking modest net hiring. Some firms report raising prices or wages and complain of selected increases in non-labor costs, but most say they are holding their prices and wages stable. The outlook for 2011 is slightly more optimistic than last time, with somewhat less reference to downside possibilities.\nRetail and Tourism\nFirst District retailers report mixed sales results for the fall months. Year-over-year same-store sales range from decreases in the low single digits to increases in the low single digits, with several contacts reporting flat sales. The majority of contacted retailers expect a highly promotional holiday shopping season yielding modest sales increases. Inventory levels are mixed, but generally in line with expectations. One respondent notes that cost pressure from reduced ocean freight capacity has abated, while another reports increasing price pressure from rising fuel costs. Headcounts continue to increase; these increases primarily reflect new store openings, although some firms are staffing up for the holidays. One respondent cites increased wage pressures. Retailers note significant cost increases for commodities, particularly cotton, liquid sugars, and nuts. Outlooks range from cautious to cautiously optimistic, with most contacts making less mention of downside risks than in earlier conversations.\nTravel and tourism in the Boston area is strong. One contact attributes the trend to generous travel incentives and perceived value. Leisure travelers are reported to be taking more frequent short vacations rather than fewer long trips. The tourism outlook is seen as positive as long as the promotions continue.\nManufacturing and Related Services\nNearly all contacted manufacturing firms are relatively upbeat about their current activity levels. Firms in the semiconductor sector continue to report particularly robust sales growth in the third quarter, and manufacturers who sell components for automobiles and other machinery also report relatively strong revenue growth. A couple of manufacturers note that their sales are on pace with the very strong results they posted in the fall of 2008, prior to the economy's deterioration. Other firms indicate that their sales figures have weakened somewhat relative to the first half of this year, but are still strong relative to 2009. Most responding firms express less concern now than at the end of the summer that sales growth has plateaued and/or could diminish.\nInventory levels at most contacted firms have risen a bit since the second quarter, either to correct undue reductions made in response to the economic downturn or to limit future supply disruptions. One firm notes that its inventory levels are back on plan after being low for a few quarters because of a dramatic increase in orders. Some manufacturers say their suppliers continue to operate at capacity and are still slow to provide necessary production materials. These continued tight supplies along with rising oil and metals prices have created input cost pressures for selected firms. To offset their higher costs at least partially, these manufacturers (most of whom are intermediate-goods suppliers) have either raised their selling prices or plan to do so in the near future; one firm plans to raise prices from 4 percent to 6 percent, expecting that only about half of the increase will stick. Notwithstanding these exceptions, responding manufacturers characterize selling prices as relatively stable.\nAll but one of the contacted companies reports stable to increasing employment. The number of recent or planned hires at individual firms is not large, but they say business is good and they need more staff to handle the increased demand. Nonetheless, employment remains well below 2008 levels at most firms. In addition, capital expenditures currently remain in line with plans and most firms expect little if any change in capital spending for 2011.\nResponding manufacturers generally expect growth to continue at a reasonable pace heading into 2011, although a few say they think 2011 may not be quite as strong as 2010. Indeed, some uncertainty continues to surround the outlook for next year. A number of firms, however, are somewhat less cautious when discussing the prospects for next year than they have been in recent conversations.\nSoftware and Information Technology Services\nNew England software and information technology contacts report that business continues to improve, with year-over-year revenue increases ranging from mid-single digits to over 20 percent in the most recent quarter. Increased activity has led most respondents to continue raising their headcounts. One contact is adding positions across the board, reporting a 10 percent increase in staff year-to-date; another, by contrast, reports a modest reduction, with a number of customer service and information technology positions being sent overseas. Prices are holding steady, although most respondents report that strong discounting pressure still exists. Capital and technology spending is relatively unchanged, with only one contact reporting an increase in outlays. Respondents are generally more optimistic than they were three months ago. With strong order pipelines, most are expecting a continuation or slight acceleration of their current rate of growth in early 2011.\nStaffing Services\nA majority of New England staffing contacts report that business continues to expand. Most contacts describe business since the end of the third quarter as \"good\" or \"slightly improved,\" citing revenue growth in the single-digit range, although a few have experienced inconsistent activity in recent months. Year-over-year revenue changes range from flat to up more than 30 percent. Labor demand has strengthened, particularly in the information technology, medical, manufacturing, and legal sectors. Labor supply is starting to tighten, with contacts reporting increasing difficulty in finding qualified candidates, especially for high-skilled jobs. In response, many contacts have strengthened their recruitment efforts and some have expanded their sales forces. Jobs remain hard to fill from the demand side as well: an elongated hiring cycle persists, with many clients still reluctant to hire. Some respondents continue to express concern over rising employment-related costs such as UI and workers' comp. Despite these concerns, staffing contacts remain generally positive in their outlook, predicting faster growth in 2011.\nCommercial Real Estate\nReports indicate that New England's commercial real estate market improved modestly in recent weeks. Office leasing volume is up in core Boston business zones, but mostly because of lease renewals as net absorption remains close to zero. Providence saw slow but positive net absorption and a pickup in leasing activity in recent weeks. In Portland, no significant absorption is reported but rents appear to have leveled off and some significant deals for downtown office space are under discussion. By exception, market fundamentals are flat in Hartford as business sentiment remains cautious amid uncertainty.\nAround the region, investment sales activity is on the rise across most sectors, with multifamily still the most in-demand property class and retail second. Competition for well-leased multi-family properties in prime locations has intensified: financing terms are increasingly favorable and capitalization rates have fallen to as low as 5 percent in some cases. Respondents note a number of modest construction and development projects around the region, including retail construction and speculative (residential) land development in Portland, a significant number of multifamily projects in Boston, and health-care-related activity in Providence.\nBoston contacts are moderately optimistic but do not expect growth to result in substantial net absorption during the next six to 12 months. Risk of further downward pressure on office rents in Boston's financial district continues, reflecting both high vacancy rates and a downward shift in the cost basis among properties recently sold at discounts. A Providence contact, while quite optimistic in the near term, sees some vacancy risks on the horizon in two to three years. Portland's outlook is more upbeat than in the last report, based on talk of growing investor interest and potential leasing demand. The outlook for Hartford remains uncertain and our contact is not willing to bet on robust growth in the near future.\nResidential Real Estate\nHome and condos sales in the First District declined again in September on a year-over-year basis. Contacts throughout the region continue to attribute the declines to the expiration of the tax credit, along with job insecurity and more general economic uncertainty. Respondents expect year-over-year monthly declines for the rest of the year and worry that 2010 sales will be lower than 2009. At the same time, the median price of homes and condos is edging up in most parts of the region. Some contacts say the rise in the median price is due to increased activity in higher-end properties, not to a broad increase in home prices. Inventory continues to climb throughout the region; most contacts see these increases as a positive development because the number of properties for sale has been very low. Contacts do not expect strong activity to return to the region's housing markets until consumer confidence improves.\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\nDecember 1, 2010\nReports from Sixth District business contacts indicated that economic activity rose modestly in October through mid-November. Retailers noted some increase in traffic and sales, and expectations for holiday sales were generally positive. Tourism related spending improved largely as a result of an uptick in international visitors and business travel. Realtors and homebuilders cited ongoing weakness in sales and construction. The District's office and industrial real estate markets softened as construction levels declined and vacancy rates rose. However, several contacts indicated that modest improvements were noted in leasing activity. Manufacturers reported continued increases in new orders and production. Credit conditions remained constrained and weakness in loan demand persisted. District labor markets continued to recover slowly, but businesses expressed cautiousness regarding adding full-time employees. Labor and material prices rose slightly, but most firms noted that they had little ability to pass costs through to customers.\nOverall, most business owners suggested that the lack of robust sales growth was the major factor holding back their hiring plans and their demand for credit, although several also cited ongoing tax and regulatory policy uncertainty as additional constraining factors. Limited capital spending was focused primarily on required maintenance and efforts to increase efficiencies.\nConsumer Spending and Tourism\nMost retail stores and auto dealers reported that traffic and sales increased in October through mid-November. The outlook among retailers was positive and expectations for the holiday season were cautiously optimistic. Retailers noted that customers remain quite value conscious and responsive to price changes.\nTourism activity improved relative to a year earlier and the outlook was generally positive for the holiday season. Hotel occupancy rates rose in several of the District's major markets compared to last year and cruise bookings were strong. However, discretionary spending at both hotels and cruise ships was relatively soft. International visitors remained a major source of tourism growth in the District. Contacts also reported solid increases in business travel and group travel bookings.\nReal Estate and Construction\nReports from residential brokers indicated existing home sales weakened in October through mid-November on a year-over-year basis. Many brokers, most notably in Florida, reported that the moratorium on distressed sales led to a stall in activity. District homebuilders indicated that new home sales growth and construction activity weakened further. Home prices remained below the year-earlier level, but declines moderated somewhat. Contacts noted downward pressure on prices across much of the region from distressed property sales. Despite weak buyer traffic, the outlook for sales growth over the next several months improved somewhat.\nNonresidential construction activity softened across the District. Contractors noted that the pace of commercial development was below the year-earlier level and backlogs remained low. Vacancy rates remained elevated across much of the region, although modest improvements were noted in leasing activity. Most contacts expect the commercial real estate market to remain weak over the next year.\nManufacturing and Transportation\nDistrict manufacturers indicated that the pace of new order growth moderated slightly, while production growth remained flat compared to the previous report. Several respondents noted plans to increase production in the short-term, however. District transportation companies continued to report improved freight volumes from year-earlier levels, although the pace of growth has moderated from earlier this year. Regional rail companies noted strong growth for metal and chemical goods, while shipments of motor vehicles and parts softened. The outlook among transportation firms was optimistic as rail companies noted benefits from rising international shipments of coal and farm products.\nBanking and Finance\nBanks continued to report little loan demand. Troubled real estate loans continued to increase, negatively affecting bank profitability. Overall, access to credit among small businesses slightly improved, although several noted ongoing difficulty obtaining credit on favorable terms. Reports indicated that credit standards for smaller firms eased more at community and regional banks than at large national banks. However, many small businesses indicated that although banks were willing to lend, the terms were unacceptable to the borrower. Firms related to construction and real estate experienced the most difficulty obtaining credit.\nEmployment and Prices\nDistrict labor markets continued to slowly recover in October through mid-November. Business contacts reported that they were waiting for clearer signals of improved business prospects before adding significantly to payrolls. Businesses that were hiring were doing so cautiously, and many noted that they were being selective in choosing the most productive and versatile applicants. The majority of businesses cited a strong preference for using part-time or temporary staff in response to an increase in sales, allowing for more efficiency and flexibility.\nBusiness contacts expressed considerable uncertainty about cost pressures over the coming year. Most felt that any pressure from higher labor and materials costs would be largely absorbed by reductions in profit margins. Overall, businesses remained reluctant to pass higher input costs through to customers given the relative softness in sales and orders. However, some transportation and food service firms indicated they plan to raise some of their prices because of cost increases.\nNatural Resources and Agriculture\nRegional oil production remained above earlier levels as production from existing offshore platforms came online. Although drilling activity remains well below pre-oil spill levels, the number of rigs operating in the Gulf of Mexico has crept up since hurricane season ended. Contacts have noted some concern that the pace of drilling permit issuance continues to lag, which could weigh on future energy output in the Gulf.\nMost District areas benefitted from improved weather conditions in late October and early November. The outlook for the region's key agricultural products was brightened by favorable market conditions. Strong global demand and tight supplies have particularly boosted soybean and cotton prices, recently reaching historic highs.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

St Louis

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"Beige Book Report: St Louis\nDecember 1, 2010\nReports from contacts in the Eighth District have been mixed since our previous survey. Manufacturing activity has continued to increase, while activity in the services sector has declined. Retail sales in October and early November decreased compared with a year ago, while auto sales increased over the same period. Home sales have declined across the District, while commercial and industrial real estate market conditions have been mixed. Lending at a sample of large District banks was mostly unchanged over the three-month period ending in October.\nConsumer Spending\nSurvey respondents indicated that retail sales in October and early November were down, on average, over year-earlier levels. About 54 percent of the retailers saw decreases in sales, while 42 percent saw increases and 4 percent saw no changes. About 39 percent of the respondents noted that sales levels met their expectations, 50 percent reported that sales were below expectations, and 11 percent reported sales were above expectations. Higher-priced items continued to be weak sellers. About 58 percent of the contacts noted that inventories were at desired levels, while 29 percent reported too-high inventories and 13 percent reported too-low inventories. The sales outlook among the retailers for the rest of the year was positive. About 61 percent of the retailers expect sales for the rest of the year to increase over 2009 levels, while 26 percent expect sales to decrease and 13 percent expect sales to remain unchanged.\nCar dealers reported that sales in October and early November were up, on average, compared with year-earlier levels. About 54 percent of the car dealers saw increases in sales, while 29 percent saw decreases and 17 percent saw no changes. About 29 percent of the car dealers noted that used car sales had increased relative to new car sales, while 8 percent reported the opposite. Also, 20 percent reported an increase in low-end vehicle sales relative to high-end vehicle sales. Roughly 17 percent of contacts reported that their inventories were too low. A similar number of contacts reported that inventories were too high. The sales outlook among car dealers for the rest of the year was also positive. About 58 percent of the car dealers expect sales for the rest of the year to increase over 2009 levels, but 29 percent expect sales to decrease. The remaining 13 percent expect sales to be similar to last year's.\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 reduce operations. Firms in the boat, sanitary paper product, primary metal, adhesive, textile, and automobile parts manufacturing industries reported plans to expand existing operations and hire new employees. Contacts in the plastic materials and resin, fabricated metal product, automobile parts, and refrigerator and freezer manufacturing industries reported plans to open new facilities in the District as well as hire new employees. In contrast, firms in the wire product, air conditioner, motor, and container manufacturing industries announced plans to decrease operations and lay off workers.\nServices sector activity has declined since our previous report. Many contacts reported plans to decrease operations and lay off workers in the near future, while a smaller number of contacts reported plans to open new facilities and expand operations. Contacts in the architectural, government, education, gambling, transportation, and hotel services industries reported plans to decrease operations and lay off workers. Additionally, a firm in the entertainment industry announced plans to close its facility and lay off workers. In contrast, contacts in the health care, government, and business support services industries announced plans to expand existing operations and hire new employees.\nReal Estate and Construction\nHome sales declined throughout most of the Eighth District. Compared with the same period in 2009, September 2010 year-to-date home sales were down 7 percent in St. Louis, 1 percent in Little Rock, and 4 percent in Memphis, but increased 8 percent in Louisville. September 2010 year-to-date single-family housing permits increased in the majority of the District metro areas compared with the same period in 2009. Permits increased 14 percent in Little Rock, 10 percent in St. Louis, and 14 percent in Memphis, but decreased 2 percent in Louisville over the same period.\nCommercial and industrial real estate market conditions throughout the District continued to be mixed. Compared with the second quarter of 2010, third-quarter 2010 industrial vacancy rates increased in Little Rock and Louisville but decreased in Memphis and St. Louis. During the same period, suburban office vacancy rates increased in Little Rock but decreased in Louisville and St. Louis. In Memphis, suburban office vacancy rates remained the same. The downtown office vacancy rates increased in Louisville and Memphis but decreased in Little Rock and St. Louis. Commercial and industrial construction was slow across most of the District. Contacts in St. Louis and northeast Arkansas reported that the pipeline for commercial construction projects is dry. A contact in south-central Kentucky reported that commercial construction is stable, but still not at the same level as recent years. A contact in southern Indiana noted a few industrial development projects. A contact in Louisville reported that speculative construction remains hampered by the lack of financing and economic uncertainties.\nBanking and Finance\nA survey of senior loan officers at a sample of large District banks showed little change in overall lending activity for the three-month period ending in October. Credit standards for commercial and industrial loans remained basically unchanged, while demand was about the same. Credit standards for commercial real estate loans were also basically unchanged, while credit standards for residential mortgage loans and consumer loans ranged from unchanged to tightened somewhat. Meanwhile, demand for commercial real estate, residential mortgage, and consumer loans all varied slightly, ranging from moderately weaker to moderately stronger.\nAgriculture and Natural Resources\nLower-than-average rainfalls and warmer temperatures expedited the completion of the corn, soybean, sorghum, and cotton harvests in the Eighth District. However, dry conditions resulted in a 41 percent to 89 percent reduction from last year in the level of adequate and surplus topsoil moisture levels.\nBy early November, states in the Eighth District had planted at least 13 percent more winter wheat in comparison with the average levels planted by this time during 2005-09, and at least 70 percent of the current winter wheat crop in the District was rated in fair or better condition.\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 20, 2010\nEconomic activity continues to exceed year-earlier levels according to most business contacts in the First District. Retailers cite somewhat more positive results than they did six weeks ago. Manufacturers report continued growth, although some at a slower pace recently than in the first half of the year. Consulting industry contacts also indicate sales are higher than a year ago. Commercial real estate markets remain in the doldrums, while sales of residential properties remain below year-earlier levels, as they have since the expiration of homebuyer tax credits. Hiring among retail, manufacturing, and consulting firms remains limited and these contacts expect continued growth, albeit at a modest pace. Indeed, across all sectors, the outlook appears to be \"more of the same.\"\nRetail\nFirst District retailers report mixed sales results for September and early October. Year-over-year same-store sales range from decreases in the low single digits to increases in the mid single digits. Contacts note that consumers are increasingly responsive to \"getting a good deal;\" those with increases attribute the uptick in sales to strong marketing, promotional activity, or stocking \"the right mix of products\" at discounted prices.\nInventory levels are in line with expectations and capital spending is generally on target. Headcounts are either stable or growing modestly, with most increases attributed to new store growth. One respondent notes significant cost increases for food commodities, particularly dairy, nuts, and bacon. The majority of contacts believe the recovery will be slow and steady, and even those retailers reporting sales increases characterize themselves as cautiously optimistic.\nManufacturing and Related Services\nNearly all contacted manufacturing firms report continued sales growth in the second half of the year after very strong first-half results. One semiconductor firm reports record sales and profitability in the third quarter and other firms selling into semiconductor-related markets also report robust growth. Some of this growth is fueled by strong demand overseas, but some is also coming domestically from the auto industry. Business also remains very strong at a technology services firm. However, a number of firms note that even as sales continue to increase on a year-over-year basis, demand has slowed relative to the first half of 2010. One firm, which manufactures products for the residential real estate market, attributes this deceleration to some of its customers destocking after buying in anticipation of second half demand that never fully materialized; this firm expects sluggish demand going forward. Overall sentiment amongst responding manufacturers is that demand will continue to be subdued for the rest of the year and into 2011, although few, if any, expect conditions to worsen.\nInventory levels at most contacted firms remain low, and a few are trying to bring their inventories down further. Many respondents reduced inventories in response to the economic turmoil in 2008 and 2009 and plan to maintain low inventories and lean operations going forward to improve profitability. In contrast, one semiconductor firm has a large backlog of orders and is struggling to keep up with demand from the auto industry. A few firms are facing pricing pressures from rising input costs. In particular, the cost of steel and copper continue to rise as does the cost of wheat, which is used by a food products manufacturer. One responding firm increased prices modestly earlier in the year and anticipates having to raise prices another 1 percent to 3 percent between now and the first quarter of next year to cover rising steel costs. Other companies facing price pressures have strategically increased prices for some of their products and have met little resistance.\nHiring continues to be limited amongst contacted manufacturing firms; the few companies noticeably increasing headcount are doing so overseas. Several companies are hiring to replace workers lost to attrition or retirement, but nearly all respondents are maintaining their existing U.S. headcounts. These firms say they do not plan to do any substantial hiring until the demand environment noticeably improves and current levels of economic and fiscal uncertainty subside.\nCapital spending plans at most manufacturers remain moderate. Most contacted firms continue to report that capital expenditures are in line with plans; none anticipates any big changes in capital spending heading into 2011, although nearly all report that their current financial position and ability to invest are excellent.\nOverall, the firms contacted are slightly less optimistic about growth in 2011 than in the last few conversations. This softer outlook reflects both the recent softening of demand relative to earlier in 2010 and continued uncertainty surrounding consumer demand and the regulatory and tax environments.\nSelected Business Services\nConsulting contacts in the First District all agree that demand improved significantly in the third quarter compared to a year ago. Most saw a slight decline in demand during July and August due to seasonality and a modest increase in demand during September. By exception, a healthcare consulting firm saw revenues rise 10 percent in the third quarter and 25 percent year-over-year; this contact explains that businesses are still responding to regulatory changes following healthcare reform, which keeps demand for healthcare consulting services strong. Another contact cites increased activity from IT companies and the private equity sector, but notes demand from the construction industry is still lagging.\nPrices are stable for most consulting contacts, with the exception of one firm that raised prices 5 percent. While not raising list prices, contacts have been able to eliminate discounts they offered to maintain business throughout 2008 and 2009. While most consulting respondents are only replacing workers leaving through natural attrition, some added a small number of new employees, increasing headcounts by 5 percent to 10 percent; one firm, by contrast, expects to downsize slightly next year.\nBased on improved demand seen in September and early October, all the consulting contacts are optimistic about the last quarter of 2010 as well as about next year's performance. Most expect about 10 percent annual growth for 2011.\nCommercial Real Estate\nReports from commercial real estate contacts are mixed. In Boston, office leasing volume remains limited, with activity flat since August and weaker than during the first half of 2010. Boston's net absorption for office space is perceived as negative, while apartment vacancy rates are falling. In Portland, leasing volume has been flat since the last report but is up year-over-year, while competition for tenants remains aggressive. A Providence contact is more upbeat, describing net absorption as positive.\nIn positive news from the sales market, Boston's Hancock Tower sold recently at a markup of 40 percent over its foreclosure auction price in March 2009. In contrast, a downtown Boston office building with high vacancies is being sold for less than half of its 2007 price. Despite uneven performance and limited volume in the big-ticket property market, a Boston-based bank that targets smaller-ticket properties is having one of its best years ever in terms of commercial real estate loans booked, although most of its lending activity involves refinancing rather than new acquisitions. The bank also reports that a previously non-performing retail-property loan resumed payment.\nBoston contacts do not expect significant commercial real estate improvements in the near future unless the labor market heats up considerably. A Providence contact is optimistic that leasing volume will hold up in the coming months, but also noted some risks on the horizon. A Portland contact expects his firm's brokerage volume to improve in 2011 over 2010 and sees potential expansion in some (but not all) sectors of Portland's economy.\nResidential Real Estate\nSales figures for single-family homes and condos continued to come in below their year-earlier levels in August. Contacts throughout New England say the expiration of the tax credit coupled with a weak economy has slowed the housing market. Meanwhile, the median prices of homes and condos rose in August compared to last year, except in New Hampshire where the median home price slipped 2.7 percent. Inventory continues to rise throughout the region; most contacts interpret the increasing number of listings as a sign of confidence among sellers. Contacts in Massachusetts and Rhode Island believe the greater choice of inventory may help draw buyers into the market; by contrast, very high levels of inventory in New Hampshire are causing concern.\nPending sales figures for Massachusetts suggest that September's final sales will also be below a year ago. Contacts around the region forecast flat sales or continued year-over-year declines for the rest of 2010. As of August, all six New England states report year-to-date home sales above last year, but most contacts expect that by the end of the year the total number of sales will be about even with 2009.\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 20, 2010\nBusiness activity in the Third District has been mixed since the last Beige Book. Manufacturers, on balance, reported slight decreases in shipments and new orders in September. Retailers posted modest year-over-year increases in sales during the back-to-school shopping period. Motor vehicle dealers generally reported steady sales in September and year-over-year gains for the month. Third District banks reported level loan volume outstanding in the past few weeks. Residential real estate agents indicated that sales of existing homes have edged up in the past few weeks, but homebuilders indicated a mostly flat sales pace for new homes. Contacts in the commercial real estate sector said there has been practically no change in market conditions since the last Beige Book. Service-sector firms reported mostly marginal increases in activity in the past month. Business contacts indicated that prices of most goods and services have shown no change, although there were continued reports of rising prices for metals and new reports of increases in lumber prices. Some retailers said there have been increases in some wholesale prices and international freight charges.\nThe outlook among Third District business contacts is positive, on balance, but not robust. Manufacturers forecast a rise in shipments and orders during the next six months. Retailers expect sales to expand slightly through the end of the year. Bankers expect only minimal growth in lending in the near term. Contacts in both residential and commercial real estate expect flat to slowly rising activity into the middle of 2011. Service-sector companies also expect slow growth during the next six months.\nManufacturing\nThird District manufacturers reported slight decreases in shipments and new orders from August to September, on balance, as well as a decrease in order backlogs. Despite the generally slower activity among the region's manufacturing industries, some sectors reported increases in demand for their products, notably makers of industrial machinery and equipment, producers of wood products, and food processers.\nThird District manufacturers expect business conditions to improve during the next six months, on balance. Among the firms surveyed in September, about 45 percent expect increases in new orders and shipments, and about 20 percent expect decreases. Manufacturing executives continued to remark that recovery in their business has been slow and halting. One said, \"Some parts of our business begin to pick up but others decline,\" and another described business as \"choppy.\" Capital spending plans among area manufacturers remain positive, overall, but are not strong. About 20 percent of the firms polled in September plan to increase expenditures for new plant and equipment and about 10 percent expect to reduce spending.\nRetail\nThird District retailers reported modest year-over-year gains for the back-to-school shopping period, and most of those contacted for this report said sales have continued to move up in recent weeks. Some store executives noted that customer traffic and discretionary spending appeared to be increasing somewhat. One said, \"Sales of home goods have begun to pick up, as well as sales of things that are not necessarily must-have, but the price has to be right. The consumer is incredibly price-sensitive.\" Looking ahead, most of the retailers contacted for this report said they expect sales to continue to increase at around the current growth rate through the end-of-year shopping period. Most agreed that stronger growth will not set in until economic conditions, particularly employment, show clear evidence of significant improvement.\nThird District auto dealers reported steady sales during September at a rate slightly above the year-ago pace. Inventories were generally described as light, and supplies of popular models were said to be particularly lean. Dealers expect sales to improve slowly during the rest of this year and into next year.\nFinance\nTotal outstanding loan volume at most of the Third District banks contacted for this report has been level since the last Beige Book. Commercial bank lending officers said there has been virtually no change in any credit category. Bankers continued to report slack demand for both consumer and business loans. \"Business loan demand is incredibly weak,\" one said. Another banker said, \"Credit line usage is well below normal.\" With low demand for credit, some bankers reported increased competition among lenders, especially for business loans. Commercial bank officers indicated that credit quality has continued to improve as borrowers work down debt.\nThe consensus outlook among the Third District bankers surveyed for this report is that there will be minimal growth in lending until both consumers and businesses regain confidence that the economy is improving. Several bankers said that in recent discussions with their commercial customers, both business owners and managers said they are postponing expansion and other capital spending programs until current political and economic uncertainties are resolved.\nReal Estate and Construction\nContacts in residential real estate markets reported some increases in sales of existing homes in recent weeks but relatively flat sales of new homes. However, the recent sales rate remained below the year-ago rate for both new and existing homes. Contacts continued to report that lower-priced homes are selling at a relatively better pace than higher-priced homes. Residential real estate contacts expect sales to remain slow until overall economic conditions and the employment situation begin to improve. Real estate contacts generally indicated that prices of existing homes have shown little change recently. However, one agent reported that \"more sellers are just saying no to offers substantially below the asking price.\"\nNonresidential real estate firms indicated that conditions have been mostly unchanged in commercial and industrial markets since the last Beige Book. Contacts reported that vacancy rates and rents have moved very little since mid-year in most parts of the District. Among property types, market conditions were said to be weakest for retail space. Some contacts also noted declining demand for industrial space, where many firms have taken a \"wait and see\" attitude toward new construction, according to one contact. Commercial real estate contacts expect market conditions to improve very slowly, and some estimate that a significant increase in nonresidential construction will not begin until mid-2011 at the earliest.\nServices\nService-sector firms generally reported marginal increases in activity since the previous Beige Book. Some contacts said growth in customer counts, measures of output, or dollar value of sales had recently fallen below their forecasts. Among firms providing services to both businesses and individuals, there were several reports of increasing competition in terms of pricing or level of service. In the current environment, \"a lot of growth is market share gains,\" one contact noted. Looking ahead, most of the service firms contacted for this report expect growth to be slow for the rest of this year and into next year.\nPrices and Wages\nReports on input costs and output prices indicate little change since the last Beige Book. Most of the manufacturing firms polled in September reported no change from August in the costs of the commodities they use or the products they make. However, some producers of primary metals raised prices. Construction firms gave mixed reports on prices, with some noting steady materials costs and some indicating increases for steel, lumber, and rubber products. Retailers generally noted that most wholesale costs and retail prices have been steady, although some contacts noted recent increased costs for some commodities and higher costs for international shipping. One large retailer said foreign suppliers have indicated that they plan to raise wholesale prices next year.\nBusiness firms in the region reported no major changes in wages, although many continued to report current or prospective increases in costs for employee health care benefits. Employers generally reported that they were not having difficulty finding workers with requisite skills at current compensation levels. Employment agencies reported that client companies are filling positions as workloads increase, but do not appear to be adding employees in anticipation of increased activity.\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 20, 2010\nThe Tenth District economy posted moderate but uneven growth in the September reporting period. Restaurants, hotels, and general retailers reported a rebound in activity but auto sales remained soft. Manufacturing activity rebounded but did not translate into additional factory hiring. Residential and commercial real estate markets weakened further. District banks reported stable banking conditions overall with some deterioration in loan quality. Continued expansion in the energy sector supported increased hiring and capital spending. In agriculture, favorable crop growing conditions and attractive profit margins spurred capital spending and land price gains. Despite higher input prices, selling prices in most retail sectors remained unchanged, and little evidence of wage pressures was reported in District labor markets.\nConsumer Spending\nDistrict retailers reported stronger than expected sales in September and indicated sales were higher relative to last year. Retailers remained optimistic that sales would continue to increase in the coming quarter but expected softness in selling prices. Restaurants reported much higher sales than a year ago and anticipated future sales gains going forward. The average check amount at restaurants remained flat, although menu prices increased. Automobile sales weakened considerably from the last reporting period but remained slightly above year-ago levels. Auto inventories continued to decline and dealers expressed satisfaction with current inventory levels. The lodging industry noted improved hotel occupancy rates with mountain resort bookings above year-ago rates. Some hoteliers indicated that the occupancy bounce was likely seasonal in nature but reported improved expectations for both occupancy and room rates.\nManufacturing and Other Business Activity\nThe Tenth District's manufacturing sector reported a mild rebound following softness in the prior reporting period. Factory operators reported expanded production, shipments, and new orders, and firms remained optimistic about future production levels. Despite increased activity, few firms reported planned increases in capital spending or hiring in the coming six months. The rebound in activity produced an increase in backlogs and raised expectations for future backlogs. Some improvement was reported in orders for export markets, though expectations for further expansion remained modest. Inventories of both raw materials and finished goods were reported as in balance with no planned changes from existing levels. The strength reported in manufacturing did not spillover to transportation firms as contacts noted unexpected weakness in activity. Some high-tech firms reported sales growth, but expectations for improvement in the coming two quarters were subdued. Capital spending activity by high-tech firms continued its upward trend but firms reported somewhat diminished expectations for the upcoming six months.\nReal Estate and Construction\nResidential and commercial real estate activity continued to decline. Residential respondents reported decreased sales volumes and home prices in the District. However, some movement was noted in upper-end home sales. Housing inventories continued to increase and were expected to rise further in coming months. In contrast, residential builders reported increased housing starts, traffic, and new home prices. Mortgage refinancing activity continued to expand while home purchase loans decreased. Construction supply firms noted anemic conditions, with expectations of continued decline. Commercial real estate respondents reported no vacancy rate changes, but sales, prices, rents, completions, and absorptions were lower, with little to no expectation of conditions improving in the next quarter. The majority of real estate and construction respondents noted economic uncertainty among customers as a drag on any recovery.\nBanking\nBankers reported steady loan demand, stable deposits, and an unchanged outlook for loan quality. Consistent with the last several reports, overall loan demand was little changed. Demand edged up for commercial and industrial loans and residential real estate loans but decreased for consumer installment loans. Demand for commercial real estate loans was stable. Credit standards were unchanged in all major loan categories, after tightening modestly on commercial real estate loans in the last two reports. Somewhat more bankers reported deterioration in loan quality from one year ago than reported an improvement. However, for the fourth straight report, respondents expected no change in loan quality over the next six months. Deposits were basically flat, continuing the pattern since late last year.\nEnergy\nEnergy industry activity continued to expand District-wide in the latest reporting period. Oil and gas respondents reported sharply increased activity relative to both month-ago and year-ago levels. The number of active drilling rigs expanded but continued to lag rig deployments nationally. District exploration remained focused on crude oil and natural gas liquids, especially in New Mexico and Oklahoma. Gas rig counts expanded in Colorado but contracted in Oklahoma. Oil and gas firms reported equipment shortages and some difficulty finding qualified workers, especially in rural areas. A few firms reported limited access to capital and rising operating costs as constraints on drilling activity. Wyoming coal production expanded rapidly since the last report, with train car loadings reaching a yearly high in the Powder River Basin. Anticipated long-run demand from international nuclear power projects prompted expansion in District uranium production, despite continued low market prices.\nAgriculture\nAgricultural conditions remained favorable since the last reporting period. The majority of the corn and soybean crops were rated in good to excellent condition with expectations of bumper yields. The fall harvest was on schedule and winter wheat planting was progressing well. Crop prices strengthened further, boosting income expectations for District farmers. Higher feed costs, however, trimmed incomes for livestock producers. Stronger profits for crop producers spurred higher cropland values and a rebound in capital spending on agricultural equipment and grain storage facilities. Repayment rates on farm loans improved with higher incomes, and lenders reported a drop in the number of loan renewals and extensions.\nWages and Prices\nRaw materials prices increased, although selling prices and wages remained flat. District manufacturers reported that raw materials prices remained above year-ago levels and expected the upward trend to extend into the next six months. Selling prices in most sectors remained flat since the last reporting period but were generally below a year ago. Menu prices at restaurants increased modestly from month- and year-ago levels, and respondents expected prices to continue to increase, pressured by rising food costs. Firms continued to report little evidence of wage pressures across District labor markets and did not expect pressure in the near future.\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 20, 2010\nPrepared at the Federal Reserve Bank of Dallas based on information collected on or before October 8, 2010. This document summarizes comments received from business and other contacts outside the Federal Reserve and is not a commentary on the views of Federal Reserve officials.\nReports from the twelve Federal Reserve Districts suggest that, on balance, national economic activity continued to rise, albeit at a modest pace, during the reporting period from September to early October.\nManufacturing activity continued to expand, with production and new orders rising across most Districts. Demand for nonfinancial services was reported to be stable to modestly increasing overall. Consumer spending was steady to up slightly, but consumers remained price-sensitive, and purchases were mostly limited to necessities and nondiscretionary items. New vehicle sales held steady or rose during the reporting period; sales of used automobiles were strong as well. Activity in the travel and tourism sector picked up.\nHousing markets remained weak with most Districts reporting sales below year-ago levels. Reports on prices suggested stability, however. Conditions in the commercial real estate sector were subdued, and construction was expected to remain weak. Lending activity was stable in most Districts. Agricultural conditions were generally favorable, and above-average yields were expected in most reporting Districts. Activity in the energy sector continued to expand.\nInput costs, most notably for agricultural commodities and industrial metals, rose further. Shipping rates increased, and retailers in some Districts noted rising wholesale prices. However, prices of final goods and services were mostly stable as higher input costs were not passed on to consumers. Wage pressures were minimal.\nManufacturing\nManufacturing activity continued to expand, and several Districts reported gains in production or new orders across a wide range of industries. The only exceptions were the Philadelphia and Richmond Districts, where activity softened compared with the previous reporting period. Exports boosted manufacturing activity according to contacts in the Cleveland, Chicago, and Kansas City Districts. Producers of semiconductors and other high-tech equipment saw continued growth in sales in the Boston, Dallas, and San Francisco Districts. Auto production rose strongly in the Cleveland and Chicago Districts. Metals producers in the Chicago District reported that September sales were the strongest year-to-date, while contacts in the Minneapolis, Dallas, and San Francisco Districts saw only modest gains. Shipments of steel in the Cleveland District continued to be buoyed by demand from energy-related, automotive, and heavy equipment industries. Food processors in the Philadelphia and Dallas Districts noted solid demand for their products, while a few contacts in the St. Louis and Minneapolis Districts reported plans to expand existing operations.\nRefiners in the Dallas and San Francisco Districts noted a slowdown in activity and rising inventories. Demand for construction-related products remained weak, and reports on activity in the wood products and furniture manufacturing industries were mixed.\nHiring at manufacturing firms remained sluggish. Inventories were generally light or in line with orders. Future capital spending plans appeared to be limited, except for in the St. Louis District where several manufacturers reported plans to build new plants or expand operations. Manufacturers' assessments of future factory activity were optimistic in the New York, Philadelphia, Chicago, and Kansas City Districts, where contacts expect business conditions to remain positive or to improve in coming months.\nNonfinancial Services\nActivity was stable to modestly increasing for most professional and nonfinancial services. Demand for information technology (IT) services remained solid. IT firms in the San Francisco District noted recent growth was spurred by business investment to enhance production efficiency. In the Minneapolis District firms noted solid demand for IT services from corporate clients.\nAccounting activity improved slightly, spurred by merger and acquisition work. Contacts in the Boston and Dallas Districts noted increases in consulting activity since the last report. Healthcare consulting picked up as businesses responded to regulatory changes following healthcare reform. Appraisal and title companies noted continued strength during the reporting period, and there were some reports from architectural firms that activity had picked up.\nDemand for transportation services appears to have slowed, although reports were mixed. Freight companies in the Cleveland District noted steady to declining volumes over the past six weeks, and Kansas City's report said transportation firms saw unexpected weakness. Rail companies in the Atlanta District reported positive, but slower growth of automobile and industrial goods shipments, while port activity in the Richmond District was mixed. Dallas' report said intermodal and railroad cargo volumes edged up, but growth in international container trade volumes flattened, and small parcel shipping volumes declined in September. San Francisco reported a pickup in demand for trucking services.\nConsumer Spending and Tourism\nRetail spending was flat to moderately positive in most Districts, with the exception of the Richmond and Atlanta Districts, which noted declining traffic and sales. Contacts in the Kansas City District noted sales were stronger than expected; back-to-school spending boosted sales in the Philadelphia and Dallas Districts. Retail spending grew modestly in the Minneapolis and San Francisco Districts, and was flat in the Cleveland, Chicago, and St. Louis Districts. Retailers said consumers are slowly regaining confidence, but remain price-conscious and were largely limiting purchases to necessities and nondiscretionary items. There were reports, however, of a pickup in sales of moderately priced household goods in the Philadelphia, Dallas, and San Francisco Districts, and gains in apparel sales were reported in the Atlanta and Chicago Districts. Inventories were at desired levels. Looking ahead, retailers in several Districts expected modest sales growth through year-end. In particular, some contacts in New York planned to add more holiday staff than last year.\nMost Districts reported that sales of new vehicles held steady or rose during the reporting period. Sales of used vehicles were strong as well. Inventories remained tight, particularly for popular vehicles. Used car prices rose, reflective of solid demand and lean inventories. Respondents' outlooks were for slight growth in sales through year-end.\nReports from most Districts pointed to continued improvement in travel and tourist activity. The Richmond District reported that tourist activity strengthened, and contacts in San Francisco noted that growth in business travel and convention activity led to rising visitor counts and hotel occupancy rates. Hotel occupancy for popular tourist destinations in the Minneapolis and Kansas City Districts also rose during the reporting period and was above year-ago levels. New York's report noted that hotel occupancy rates remained high in Manhattan, but October bookings were somewhat weaker than expected. Atlanta noted that tourist activity in some areas was still being affected by the Gulf oil spill, but losses incurred in these areas were offset by increased activity in Northeast Florida, Georgia, and Tennessee and respondents' outlooks for the remainder of the year were positive. Airline traffic was stable to slightly down according to the Dallas District, but conditions were much better than a year earlier thanks to strength in business travel. Restaurants and food service contacts in the Kansas City and San Francisco Districts also noted slight increases in activity.\nReal Estate and Construction\nHousing markets remained weak. Most District Beige Book reports suggested overall home sales were sluggish or declining and were below year-ago levels. There were scattered reports of some improvement in sales in a few Districts, however. Philadelphia noted an increase in sales of existing homes, and Richmond, Kansas City, and Dallas reported upticks in sales of higher-priced homes. Sales reports were mixed in the St. Louis and Minneapolis Districts, with increases in some metro areas and declines in others. Home inventories were elevated or rising according to most District reports. Home prices were generally stable since the last report, although Kansas City noted a decrease in prices, and New York and Minneapolis reported declines in some metros. Homebuilders in the Atlanta District reported downward price pressure and expressed concern about rising foreclosures and bank-owned properties coming to market.\nSingle-family construction activity was at very low levels, but had improved somewhat in the Chicago, St. Louis, and Kansas City Districts. Atlanta reported a softening of construction activity overall, and Minneapolis said single-family building activity was mixed across metros. Builders in the Dallas District said they had pulled back on starts considerably after the run-up earlier in the year.\nRespondents' outlooks suggested sales and construction would remain subdued through year-end. There were some reports that tighter credit standards for buyers and small builders, along with general economic uncertainty, were stalling activity.\nConditions in the commercial real estate sector remained subdued. Reports suggested rental rates continued to decline for most commercial property types. The one exception was the apartment sector, where higher leasing activity led to fewer concessions, most notably in Manhattan. Office, industrial and retail rental markets remained weak, although there were a few reports of slight increases in leasing activity in the Richmond, Chicago and Dallas Districts. Commercial property sales were low overall, but contacts in the Chicago and Dallas Districts said investment demand for distressed commercial properties remained strong. Given lackluster demand for commercial space, nonresidential construction activity was limited to mostly public projects, according to District reports. Industry contacts appeared to believe that the commercial real estate and construction sectors would remain weak for some time.\nBanking and Finance\nLending activity was stable at low levels across most Districts, but there were some reports that demand picked up slightly. The Richmond and Dallas District reports noted increased lending activity, and Chicago said credit conditions continued to improve in the District. Reports from Richmond and Dallas suggested that competition for quality loans had picked up. Some contacts noted there was pressure to price loans slightly more aggressively.\nDemand for commercial and industrial loans remained weak as businesses continued to postpone capital spending plans because of economic and public policy uncertainties. However, merger and acquisition lending picked up in a few Districts. Commercial real estate lending remained subdued and loan standards were still tight.\nOn the consumer side, lending was sluggish, but there were scattered reports of improvement. Contacts in the Cleveland and Dallas Districts reported growth in auto loans. Residential mortgage lending and refinancing activity increased in several Districts, and San Francisco reported an increase in demand for nonconforming mortgage loans.\nCredit quality changed little on balance. New York reported a decrease in delinquency rates on consumer loans, however, and overall quality improved in the Philadelphia and Richmond Districts, according to reports.\nAgriculture and Natural Resources\nAgricultural conditions were mostly favorable. Fall harvest was generally ahead of its normal pace, and above-average yields were expected in most reporting Districts. There were a few exceptions, however. Widespread rains flooded farmland and delayed harvests in the Minneapolis District while dry weather affected some crops in the Atlanta and St. Louis Districts. Unfavorable weather conditions and resulting crop losses abroad continued to boost export demand for U.S. agricultural products. Commodity prices strengthened further, boosting optimism among producers in the Dallas District and spurring higher cropland values and capital spending on agricultural equipment in the Kansas City District. Additionally, corn producers in the Chicago District were holding on to recently harvested corn in hope of even higher prices.\nThe energy sector continued to expand, with activity rising further in the Atlanta, Minneapolis, Kansas City, Dallas, and San Francisco Districts. The Minneapolis District reported that mines were operating near capacity, and coal production was robust in the Cleveland and Kansas City Districts. Firms in the Dallas District noted strong domestic land-based drilling and a pickup in overseas demand had offset losses resulting from the moratorium in the Gulf of Mexico. The Cleveland and Kansas City Districts reported that strong activity had prompted hiring and an increase in capital spending at some energy firms. Respondents' outlooks were mostly positive, although low natural gas prices had dampened the outlook for producers in the Cleveland and Dallas Districts.\nPrices and Wages\nInput costs rose slightly, but prices of final goods and services were stable across Districts. Upward pressures on agricultural commodities and industrial metals prices were reported by several Districts. In addition, shipping costs increased in the Philadelphia, Atlanta, and Dallas Districts, and retailers in the Philadelphia and Chicago Districts reported higher wholesale prices. Pass-through of rising input costs to final prices remained limited although there were scattered reports of increases. Prices of petrochemicals rose in the Dallas District, and a few manufacturers in the Boston District said recent price increases on some of their products had been successful. Some manufacturers in the Atlanta District noted rising costs of materials and employee benefits would likely be passed on to customers in the near-term, and several manufacturers in the Cleveland District announced plans to raise product prices in an attempt to recover rising costs. In response to rising food costs, food producers in the Dallas District reported plans to raise prices, and menu prices at restaurants rose modestly in the Kansas City District.\nWage pressures remained minimal. Most District reports found little evidence of wage increases in general. There were widespread reports across Districts that firms anticipated increased costs of employee benefits as a result of healthcare reform.\nHiring remained limited, with many firms reluctant to add to permanent payrolls given economic softness. Reports from staffing firms were mixed. Staffing firms in the New York and Dallas Districts noted a slowdown in demand for their services, and contacts in the Cleveland District said new job openings declined. Richmond's report noted demand for temporary workers picked up slightly since the last report, and staffing contacts in the Philadelphia District said clients were adding positions as workloads increased. The Atlanta report noted a preference for increasing staff hours and using temporary help rather than hiring additional full-time staff.\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 20, 2010\nReports from Sixth District business contacts indicated that the pace of economic activity remained slow in September. Retailers noted a decrease in traffic and sales. The hospitality sector improved, although some areas continued to be affected by the lingering impact of the Gulf oil spill. Realtors and homebuilders cited further weakening in home sales and increasing inventories, while the pace of nonresidential construction was soft. Manufacturers reported that new orders grew at a slower pace and production was flat. Provision of bank credit continued to be constrained and loan demand remained weak. District labor markets continued to recover slowly, although many businesses relied on increased hours for existing staff and expanded their use of temporary hires rather than adding permanent employees. Some transportation and material prices rose slightly, but firms continued to report limited pass through to consumers.\nConsumer Spending and Tourism\nMost District merchants reported that traffic and sales decreased in September and that they are intentionally keeping inventory levels low. Contacts noted that low-end products and apparel were strong sellers, however, and the outlook among retailers improved only modestly from previous reports. District automobile dealers indicated that vehicle sales were ahead of year-ago levels.\nTourism activity across much of the District improved and the outlook for the remainder of the year was positive. Cruise bookings and pricing increased and contacts reported that discretionary spending on board rose. The impact of summer cancelations continued to be felt in many Gulf Coast destinations. However, the losses experienced in these areas have been largely offset by an increase in activity in Northeast Florida, Georgia, and Tennessee.\nReal Estate and Construction\nMost District residential real estate contacts reported that home sales weakened further in September, although several Florida brokers indicated that declines moderated. Many builders and Realtors noted that potential buyers remained on the sidelines and that acquiring mortgage financing had become more difficult recently. Cash buyers, particularly in Florida markets where price declines have been pronounced, continued to purchase homes at a strong pace. New home construction softened further from low levels. Brokers indicated that existing home listing inventories continued to rise on a year-over-year basis. Builders reported that new inventories remained below the year-earlier level, but were rising. Both brokers and homebuilders reported persistent downward pressure on home prices. Homebuilders, in particular, were concerned about the number of foreclosed and bank-owned properties coming to market. The outlook among contacts regarding sales over the next several months was weak.\nNonresidential construction activity remained soft across the District. Contractors noted that the pace of commercial development was below the year-earlier level and backlogs remained low. Contacts continued to report high vacancy rates and downward pressures on rents. The outlook for the rest of the year remained negative.\nManufacturing and Transportation\nDistrict manufacturers indicated that the growth of new orders slowed notably and that production was flat in September compared to the previous month. However, many respondents planned modest production increases in the short-term. District transportation contacts noted an overall decrease in domestic freight demand; however, this was countered by an increase in international shipments. Rail companies reported positive but slower growth of shipments of automobiles and industrial goods.\nBanking and Finance\nDistrict banking conditions remained weak as bank profitability continued to be challenged by elevated loan losses and high levels of noncurrent loans. Loan demand also remained soft. Business contacts continued to indicate an expansion of trade credit to create and extend lines of credit outside of the traditional banking infrastructure.\nEmployment and Prices\nDistrict labor markets continued to recover in September, albeit slowly. Contacts reported that they remain reluctant to hire additional full-time, permanent employees because of the uncertain outlook regarding future sales and orders. Many firms continued to note a strong preference for increasing existing staff hours and using part-time or temporary staff rather than hiring full-time staff. Firms that were hiring noted they were being very deliberate in order to get the best possible candidate from a large applicant pool.\nDistrict contacts reported that firms were resisting passing higher input costs through to consumers given the ongoing softness in sales. As a result, margins remained very thin. A number of manufacturers indicated that rising costs of materials and employee benefits were likely to be passed on to customers over the next 12 months.\nNatural Resources and Agriculture\nRegional oil production continued to rise and the Gulf of Mexico crude inventories remained near the top of their average range for this time of year. Local gasoline stocks have been declining since mid-August, as large surpluses were drawn down somewhat. Following the capping of the Deepwater Horizon well in the Gulf of Mexico, clean up and oil recovery efforts continued with ongoing environmental testing for contaminants in the water and in local fish populations.\nDistrict crops were troubled by high temperatures and dry weather in September that resulted in early harvesting. Soil moisture levels were reported as extremely low in areas of Alabama, Mississippi, and Tennessee. Regional cotton plantings were much higher than a year earlier.\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 20, 2010\nThe Eleventh District economy expanded at a more subdued pace over the past six weeks than during the previous reporting period. The energy, transportation services and staffing industries which have been a source of strength in the recovery, saw positive but slower growth. Business activity was unchanged in most other industries, although retailers said sales improved and financial firms said lending activity picked up slightly. Demand continued to be strong for petrochemical products, and agricultural conditions remained favorable. Firms' outlooks are positive, but contacts say uncertainty about economic growth, regulatory reform and public policy has introduced more caution.\nPrices\nSelling prices held steady at most responding firms, but there were some reports of increases. Small parcel shipping prices rose slightly while large parcel shipping prices increased sharply, according to contacts. Prices for some petrochemicals rose during the reporting period, and agricultural respondents said commodity prices increased across the board. Food producers were considering price increases because of rising costs for dairy and sugar, and retailers noted higher costs for cotton, corn, wheat, milk and cheese.\nAfter holding steady in a tight range between $74 and $76 dollars per barrel for most of the reporting period, the price of crude oil rose to over $80 in early October on stronger demand from China and a weaker dollar. Retail gasoline and diesel prices held steady since the last report, and natural gas prices remain under $4 per Mcf.\nLabor Market\nMost responding firms reported steady employment levels, and some noted slight hiring activity. Contacts in the airline, primary metals, transportation manufacturing and auto sales industries said they had added workers. Staffing firms reported slower growth in demand for their services, although contacts said direct hire fees for IT and professional workers had risen. Minor layoffs were reported by some construction-related manufacturers and one legal firm. Wage pressures were minimal, although higher wages were reported by airlines and some shipping and transportation manufacturing firms.\nManufacturing\nMost construction-related producers, including cement, lumber and fabricated metals firms, said orders remained flat over the past six weeks. Contacts believe soft demand is related to uncertainty about the economic and political environment. One glass contact said sales rose due to a pickup in apartment construction. Primary metals producers noted a slight uptick in business. Some contacts are selling to new markets, such as solar panel production. Others indicated that remodeling activity had boosted sales. Despite the increase, contacts believe the industry has a long road ahead.\nManufacturers of high-tech products said that sales and orders were growing at the same or slightly slower pace since the last report. Most respondents said inventories are below or at desired levels. Sales are expected to continue to grow at a moderate pace over the next six months, but there was increased uncertainty in respondents' outlooks.\nPaper manufactures said orders were slightly down, in part because customers were managing inventories more tightly. Contacts expect sales growth to be anemic through year-end. Food producers said demand growth held steady. Sales growth of premium items had picked up, but orders for value items weakened. Most transportation manufacturers noted steady demand.\nPetrochemical producers noted strong domestic demand for most products. Export growth continued to slow, reflecting higher prices, although there were reports of renewed Chinese interest in some products. Domestic orders for PVC used in commercial construction were weak, but exports were stronger, according to contacts. Refiners said conditions continued to weaken. Both margins and operating rates fell since the last report, and gasoline and distillate inventories have risen against seasonal expectations.\nRetail\nBack-to-school spending led to a pickup in sales over the reporting period, however customers remain extremely price conscious. Consumers continue to focus on non-discretionary goods, but contacts noted there was an uptick in spending on medium-priced household goods. Eleventh District sales trended roughly in line with the nation during the reporting period. Contacts expressed caution in their outlooks and said competition remains fierce.\nAutomobile sales were steady after accounting for seasonality. Inventories are a little tight, notably for large SUVs. Used car prices have risen, reflecting elevated demand and short supply. Expectations are for continued slow growth in sales.\nServices\nStaffing firms reported stagnant demand over the reporting period. Business is still at good levels, but contacts say firms are eliminating some previous positions or finding other ways to fill vacant jobs. Despite the slowdown, contacts report that demand is coming from a wide-range of industries, including light industrial, manufacturing, IT, and call centers. Clerical workers remain in high demand. Near-term outlooks remain optimistic, but contacts are more uncertain about the longer term.\nAccounting firms said business had improved modestly, as more merger and acquisition work has materialized since the last report. Contacts also noted a pickup in financial consulting and tax-related work going into the fall season. Demand for legal services remains soft. The only area of activity is mergers and acquisitions. Legal and accounting firms say they are in a better position than last year, but they remain cautious in their outlooks.\nTransportation services demand was positive, but the pace was somewhat slower over the past six weeks. Contacts said intermodal cargo volumes increased minimally, but that the increases were broad based across industries. Railroad contacts noted moderate gains in volumes overall, although shipments of grain, non-metallic minerals, chemicals and petroleum products increased at a strong pace. International container trade volumes flattened over the past month, but are up from a year ago. Firms that ship small parcel goods said volumes dipped in September after several months of positive growth. Airline traffic was steady to slightly down seasonally over the past six weeks. Contacts noted that conditions are much better than a year ago, thanks in part to stronger business travel. Transportation service respondents said uncertainty was adding caution to their outlooks. Most expect stable conditions in the near term, with a modest pickup in activity next year.\nConstruction and Real Estate\nNew home sales stabilized somewhat after a significant drop off following the expiration of the homebuyer tax credit. Entry-level builders have pulled back on starts considerably after the run-up earlier in the year, but contacts say builders in higher price points are seeing some successful sales. Rising buyer cancellations were cited as a problem, however. Contacts in the new and existing home sector said demand will likely remain subdued in the near term because of tighter credit standards and uncertainty about changes in tax policy. Contacts said this uncertainty has led more potential buyers to rent, which has led to strong apartment leasing activity.\nCommercial construction remains at very low levels. There is no speculative construction occurring, but hospital and education projects are keeping some contractors busy. Office and industrial leasing activity appears to have picked up. Contacts said very low rents were inducing firms to make new deals. Contacts said property sales continue to rise from very low levels, and investor interest remains high, especially for distressed sales.\nFinancial Services\nFinancial firms reported some pickup in lending activity. Consumer loan demand rose substantially, in large part due to growth in auto loans. Home mortgage activity picked up slightly as well. Despite high mortgage delinquencies contacts said they are not concerned with outstanding credit quality overall. Financial contacts noted increased pressure to price loans more aggressively and some have even begun altering loan structure somewhat, although overall underwriting standards remain very strict. Larger banks are reportedly seeing stronger loan demand than regional and community banks. There were reports of smaller banks passing up good owner-occupied real estate deals because of stricter enforcement of regulatory guidelines on commercial real estate.\nEnergy\nDrilling activity rose at a slower pace over the past six weeks, in part due to a decline in natural gas-directed activity. The U.S. rig count edged up by 8 rigs and 41 percent of U.S. activity is now directed to oil. Eleventh District rig activity dipped slightly although contacts said drilling continues to increase in Texas' Permian Basin. Drilling services companies said business remains strong. Outlooks were optimistic, assuming a soft landing for the natural gas drilling industry. Contacts noted strong domestic land-based drilling and improved international demand has cushioned losses sustained in the Gulf of Mexico.\nAgriculture\nOverall agricultural conditions in the District remain very positive. Tropical storm Hermine brought substantial rainfall to Texas in early September, improving soil moisture in most parts of the state but causing flood damage in some areas. Above-average growing conditions resulted in good yields, and moisture conditions are favorable going into fall planting. Demand for U.S. agricultural products remains strong and commodity prices have gone up across the board, boosting optimism among producers. Cotton will be a boon for Texas agriculture this year, as a potentially record-setting crop is matched with near record-high market prices.\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 20, 2010\nThe Second District's economy continued to expand at a modest pace since the last report. Input prices have risen somewhat, while consumer prices remain steady. General merchandise retailers report that sales were mixed but, on balance, steady and close to plan; auto dealers in upstate New York report that sales held up fairly well in August and September and that credit conditions continued to improve. Commercial real estate markets have generally been steady since the last report. Residential real estate sales markets were generally stable across the District, while New York City's rental market showed continued modest improvement. Manufacturing-sector contacts report some pickup in business during September and early October, after a pause in August. Tourism activity in New York City, though still fairly brisk, has shown some signs of cooling since the last report. The labor market has been mixed recently: manufacturers continue to add jobs and firms in a wide variety of industries plan to increase employment in the months ahead; however, contacts in New York City report that the financial industry continues to shed jobs and that hiring for office and administrative jobs generally remains sluggish. Finally, bankers report little change in loan demand, lower delinquency rates on consumer loans, and ongoing tightening in credit standards.\nConsumer Spending\nGeneral merchandise retailers report that sales have been mixed since the last report, with same store sales running roughly on par with a year ago and on or close to plan in September. Stores in Manhattan fared somewhat better than in the rest of the region, evidently helped by brisk tourism. One major retail chain notes that sales of seasonal apparel were sluggish due to unseasonably mild weather but that sales in most other categories were fairly good; this contact expects holiday season sales to be up roughly 3 percent from 2009 on a same-store basis. Another contact at a major mall in upstate New York indicates a sharp uptick in sales toward the end of September. Some New York State retailers express concern about the recent reinstatement of the state sales tax on clothing under $110, though it is too early to gauge any effect on sales. Inventories are generally reported to be at favorable levels, while prices remain steady; merchandise acquisition costs have also been steady. A few major retail contacts indicate that they plan to hire more holiday-season staff than in 2009. Auto dealers in upstate New York report that sales of new vehicles held up fairly well in August and September, though the cash-for-clunkers program last summer adversely affected year-ago comparisons. Sales and prices of used cars have reportedly been buoyed somewhat by strong demand and lean inventories of new vehicles. Auto dealers report continued improvement in credit conditions.\nTourism activity in New York City, though still fairly brisk, has shown some signs of cooling since the last report. Manhattan hotels report that occupancy rates remained close to 90 percent in September, while room rates continued to run 10-15 percent ahead of a year earlier. However, there are scattered reports of weaker than expected advance bookings for October, which may reflect some softening in business travel. Broadway theaters report that revenue weakened noticeably in September and was down roughly 10 percent from a year earlier; this reflects some recent tapering off in both attendance and ticket prices, the latter of which was down roughly 6 percent from a year earlier.\nSeparately, consumer confidence remained steady in September, though at depressed levels. The Conference Board reports that confidence among residents of the Middle Atlantic region (NY, NJ, PA) edged up in September, after falling to a more than one-year low in August; Siena College's September survey of New York State residents shows confidence holding steady in both upstate and downstate--also at weak levels.\nConstruction and Real Estate\nHousing markets have been mixed but generally stable since the last report. Real estate contacts in both northern New Jersey and western New York State report that sales activity has remained exceptionally weak as the usual seasonal pickup in September has not occurred. The ongoing weakness was partly attributed to the expiration of the home-buyers tax credit, which is believed to have pulled sales forward from the second half of 2010. Prices are characterized as relatively stable in upstate New York and drifting down in northern New Jersey, where one industry contact notes a sizable inventory of distressed properties on the market. Manhattan's co-op and condo market was stable in the third quarter: sales activity was steady, after accounting for a normal seasonal dip, and prices were steady to down slightly overall. Manhattan's apartment rental market improved modestly: effective rents are estimated to be rising moderately, as landlords pull back on concessions. New leasing activity picked up noticeably in the quarter--largely attributed to renters moving in response to the end of concessions on lease renewals.\nOffice markets across the District softened modestly since the last report. Asking rents continued to drift down in Manhattan and northern New Jersey but were mostly steady in other parts of the region. In Manhattan, office vacancy rates retreated in August and September, after rising in July. In most of the District, though, vacancy rates have edged up since the last report.\nOther Business Activity\nA major New York City employment agency, specializing in office and administrative jobs, reports that hiring activity was disappointingly sluggish in September--particularly from financial firms. Similarly, a contact in the financial industry notes that employment continues to drift down, as the pace of layoffs appears to have picked up a bit lately; some financial firms are reported to be in the market for lawyers and accountants but are not hiring much in other areas. Moreover, recent weakening in revenues is said to be constraining compensation at these firms, and year-end bonuses (typically paid out in January) are projected to be lower than this past year.\nManufacturing firms in the District report a pickup in activity in September, following a pause in July and August, and a growing proportion of manufacturing contacts indicate that they are increasing employment and plan to add more workers in the months ahead. Non-manufacturing contacts also report some pickup in business activity and have grown substantially more optimistic about the general business outlook. Both manufacturers and other firms report a moderate increase in input price pressures but only modest changes in selling prices.\nFinancial Developments\nSmall to medium-sized banks report that loan demand was generally steady overall: respondents indicate a moderate decrease in demand for consumer loans and commercial and industrial loans, but a moderate increase in demand for residential mortgages; demand for commercial mortgages was little changed. Bankers also note a continued increase in refinancing activity. Credit standards are reported to have tightened for commercial and industrial loans and mortgages, with no reports of easing standards in these categories; however, banks report little or no change in credit standards for consumer loans and residential mortgages. Bankers' responses suggest some decrease in spreads of loan rates over costs of funds for residential mortgages but no change in spreads in the other loan categories. Respondents indicate ongoing widespread decreases in the average deposit rate. Finally, bankers report a decrease in delinquency rates for consumer loans but little or no change for other loan categories. Separately, contacts at credit unions indicate that credit conditions and business activity generally remain steady.\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 20, 2010\nOn balance, economic activity in the Fourth District held steady during the past six weeks. Manufacturers reported that new orders and production rose modestly. An uptick in residential construction, retail sales, and new car buying that began in mid-summer has tapered off. Nonresidential building activity showed little change. Reports from energy companies indicated stable production, while freight carriers saw a small decline in volume. Demand for business loans showed some signs of a pickup, and consumer borrowing remained weak.\nNew hiring continues at a slower pace than seen earlier in the year. There were scattered reports of increased payrolls in manufacturing, energy, and banking. Overall, staffing-firm representatives noted that the number of new job openings declined slightly, with available openings concentrated in healthcare and professional business services. Wage pressures continue to be contained. Apart from volatility in steel and commodity prices, raw materials and product pricing were fairly steady.\nManufacturing\nReports from District factories showed that new orders and production rose modestly during the past six weeks. Production was also higher on a year-over-year basis, with many contacts experiencing double-digit increases. Several manufacturers commented that opportunities are growing faster in offshore markets than domestically. Almost all of our respondents expect business activity to follow current seasonal trends for the near term. Most steel producers and service centers reported that volume was either flat or trending up. Shipments are being driven by energy-related, auto, and heavy equipment industries. Two contacts noted that exports are gaining strength. All of our steel contacts expect little change in business activity in the near term. District auto production showed a large increase during August on a month-over-month basis, due to production starts on the 2011 models. In terms of year-over-year comparisons, production was little changed for both domestic and foreign nameplates.\nCapacity utilization is slowly rising for several manufacturers and steel producers, but it continues below pre-recession levels across the board. Inventories are balanced with incoming orders. Capital outlays remain at relatively low levels, with many of our contacts reporting that they have postponed starting projects until they are certain of a sustainable recovery. Other than volatility in steel and commodity prices, the cost of raw materials has been relatively stable. Several manufacturers announced product cost adjustments to reflect changes in steel, copper, and agricultural prices. We heard only scattered reports of companies hiring new workers, although several firms have extended work hours. Wage pressures are contained.\nReal Estate\nNew home sales have slowed during the past six weeks, and all of our contacts expect construction to remain very sluggish going into 2011. Builders continue to point to tight credit, foreclosures, and a large inventory of existing homes as reasons for the depressed market. Most homebuilders are intentionally keeping their spec inventories at low levels, and those who want to build are unable to obtain financing. Our contacts tell us that the entry-level price-point category is seeing the least activity, with most sales occurring in the move-up buyer categories. The list prices of new homes and construction material costs have shown little movement since our last report. Several builders said that they are increasing the use of discounting to close sales. General contractors and subcontractors continue to work with very lean crews.\nDiscussions with nonresidential builders showed little change in construction activity since our last report and from year-ago levels. One contractor, who noted a slow down, attributed it to seasonal factors. A few builders commented that although their backlogs have slipped, they are encouraged by the number of inquiries. New projects generally fall into the industrial category. Most of our contacts expect little change in business conditions in the near-term, with several mentioning that they are concerned about prospects for the recovery. Reports indicated stable construction material costs. New hiring by general contractors has diminished, while subcontractors are still struggling and bidding at very competitive rates.\nConsumer Spending\nOn balance, there was little change in retail sales for the period from mid-August through mid-September, when compared to the previous 30-day period. Consumers remain price sensitive and focused on buying necessities. When given the option, they prefer private-label to premium brands. Retailers expect conservative sales growth at best, going through the holiday season. Several retailers noted modest price increases from their suppliers, which they passed through selectively to consumers. Half of our contacts reported on plans to increase capital budgets in 2011 relative to this year. Hiring will be limited to temporary holiday workers.\nAuto dealers characterized new vehicle sales during August as decent, although they were slower than those seen during the peak summer season. Many sellers reported that August sales were down compared to year-ago levels due to the cash-for-clunkers program. Looking toward the year's end, dealers expect modest sales increases at best. New car inventories remain on the light side, especially for popular models. Used vehicle purchases have picked up since our last report, although supplies are tight and prices remain high. The number of financing options is growing across the District, and pricing is competitive. Still, credit standards are tight, and potential buyers often find themselves unqualified for the vehicle they want to purchase. The incremental hiring at auto stores that began in mid-summer has tapered off.\nBanking\nThe business-lending environment remains soft; however, almost half of the bankers we spoke with noted that demand showed some signs of a pickup across industries. On the consumer side, conventional loan demand remains very weak, with most of the activity found in indirect auto lending and home equity lines of credit. Interest rates for business and consumer credit moved by only a few basis points, with a slight bias to the downside, as competitive pressures are growing. Most of our contacts said that the demand for residential mortgage refinancing is very strong, while new-purchase mortgage originations remain at a slow pace. Residential mortgage rates continued their downward trend. Core deposits increased at almost all banks, with most of the growth occurring in nonmaturing products. Credit quality was generally characterized as either stable or deteriorating, while most reports on delinquencies indicated rates were stable or showed a modest decline. Several bankers noted that they have slowly increased their payrolls during the past few months.\nEnergy\nReports indicate that oil and gas output was mainly steady during the past six weeks, with output expected to remain at current levels in the near term. Companies not participating in Marcellus shale drilling, a largely untapped natural gas reserve, see the industry slowing down during the next several months due to slumping gas prices. Nonetheless, some gas producers reported increasing their capital outlays for additional drilling. Spot prices for oil are holding up. Coal production has been fairly stable since our last report, with little change in demand expected. Coal executives commented that rising government intervention into permitting and compliance issues may dampen capacity. Prices for coal were mixed but are tending to the down side. Equipment and material costs have been relatively flat. We heard scattered reports of companies hiring new workers.\nTransportation\nFreight transport executives reported steady to declining volume during the past six weeks. Still, bottom lines have improved for some carriers due to better pricing and higher productivity. Looking forward, carriers expect that any further volume decline will be modest, with a few anticipating a return to slow growth. Due to a drop in capacity attributed to carriers exiting the industry and the enactment of additional federal safety regulations, executives believe they will be able to successfully negotiate more favorable rates as demand rises. A few of our contacts reported rising prices for fuel. The cost of new tractors is substantially higher, while used equipment prices are falling. Capital outlays are expected to increase at a modest rate going into 2011, with most monies allocated for equipment replacement. Current hiring is due to attrition.\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 20, 2010\nEconomic activity in the Eighth District has expanded modestly since our previous report. Manufacturing activity increased, on balance, as did activity in the services sector. Residential real estate market conditions were mixed. Although commercial and industrial real estate market conditions remained soft, there were reports of increased activity in some areas. Overall lending activity at a sample of small and mid-sized banks in the District declined in the three-month period from mid-June to mid-September.\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 reduce operations. Firms in the detergent, frozen foods, transformer, plastic products, motor vehicle parts, and primary metal manufacturing industries reported plans to expand existing operations and hire new employees. Contacts in the construction machinery, electronic component, and wood product manufacturing industries reported plans to open new facilities in the District as well as hire new employees. In contrast, firms in the appliance, tobacco, chemical, and furniture manufacturing industries announced plans to decrease operations and lay off workers.\nThe District's services sector has also continued to improve since our previous report. Firms in the restaurant, automotive repair, air transportation support, and social services industries opened new facilities in the District and hired new employees. In contrast, contacts in the business support services, hotel, and gambling industries reported plans to decrease operations and lay off workers. Sales of new automobiles were down compared with the same time last year, while used automobiles have shown stronger sales. General retail contacts reported that sales were flat over the reporting period.\nReal Estate and Construction\nHome sales were mixed throughout the Eighth District. Compared with the same period in 2009, August 2010 year-to-date home sales were down 4 percent in St. Louis and 2 percent in Memphis. Over the same period, however, year-to-date home sales increased 14 percent in Louisville and 2 percent in Little Rock. Residential construction continued to improve throughout the District. August 2010 year-to-date single-family housing permits were up in most District metro areas compared with the same period in 2009. Permits increased 14 percent in Little Rock, 15 percent in St. Louis, and 16 percent in Memphis. In contrast, single-family housing permits decreased 4 percent in Louisville.\nActivity in commercial real estate and construction remained slow throughout most of the District. Contacts in Louisville reported that the office market remained soft and there is low demand for commercial real estate loans. While a contact in central Arkansas reported some improvement in commercial property sales, a contact in northeast Arkansas noted that commercial construction remains at a virtual standstill. Industrial real estate and construction was mixed throughout the District, with some regions showing signs of improvement. A contact in west Tennessee noted industrial development projects that are expected to aid business activity in the area. A contact in Evansville, Indiana, reported that there seems to be more \"quoting\" on major construction, but no real jobs are starting. In contrast, contacts in the west Kentucky region reported construction projects primarily related to health and hospitality. Contacts in St. Louis noted limited industrial construction projects.\nBanking and Finance\nTotal loans outstanding at a sample of small and mid-sized District banks decreased 1.8 percent in the three-month period from mid-June to mid-September. Real estate lending, which accounts for 73.2 percent of total loans, decreased 2.2 percent. Commercial and industrial loans, accounting for 16.1 percent of total loans, decreased 1.6 percent. Loans to individuals, accounting for 5.1 percent of loans, decreased 7.9 percent. All other loans decreased 8.5 percent and accounted for 5.6 percent of total loans. Over this period, total deposits increased 0.3 percent.\nAgriculture and Natural Resources\nRecent dry weather throughout most of the District provided excellent conditions for harvesting crops, although many parts of the District have subsequently faced moderate or severe drought conditions. At the beginning of October, the overall corn, soybean, sorghum, cotton, and rice harvests were ahead of their normal paces by 28 percent to 137 percent. Since our previous report, overall crop conditions deteriorated slightly for corn but remained similar or improved slightly for soybeans, cotton, and sorghum. Yield estimates for corn and tobacco in all District states that grow these crops and for soybeans, cotton, and sorghum in most District states that grow these crops declined from August to September. The remaining yield estimates, including those for rice, stayed the same or increased slightly.\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 20, 2010\nSince the last report, economic growth in the Ninth District has picked up somewhat. Consumer spending, tourism, services, manufacturing, energy, and mining saw increases. Activity in the commercial and residential real estate sectors decreased, while commercial construction remained weak. Meanwhile, residential construction was mixed and progress in the agriculture sector slowed. Labor markets showed some signs of picking up; however, overall weakness continued. Wage increases were moderate, and overall prices remained relatively level.\nConsumer Spending and Tourism\nConsumer spending grew moderately. A major Minneapolis-based retailer reported that same-store sales in September were up about 1 percent compared with a year earlier. September traffic at a North Dakota mall was up over 10 percent from a year ago, which was a surprise following a slight decrease in August, according to the mall manager. Cooler fall weather seemed to attract shoppers. August sales were up over 10 percent at a Montana mall after a few consecutive months of small gains. August sales were up slightly from a year ago at a Minneapolis-St. Paul area mall. A restaurant chain noted that sales were up 3 percent during August and September from a year earlier. However, a Minnesota-based clothing retailer noted slow uptake of new merchandise offerings; it expects low single-digit increases in same-store sales over the next few months. September car sales in Montana were mixed, according to a representative of an auto dealers association.\nTourism activity was up from a year ago. Rooms sold at Montana hotels were up almost 11 percent in August from a year earlier, according to a state tourism research organization. A tourism official in the Upper Peninsula of Michigan noted that the summer season finished well ahead of a year ago and that fall traffic seems to be holding up. Minnesota lodging and campground operators noted increases in summer business from a year earlier and were more optimistic for fall tourism than a year ago, according to the results of a state survey. In addition, attendance at the Minnesota State Fair almost reached last year's record high.\nConstruction and Real Estate\nCommercial construction was slow. A District manufacturer of commercial building materials said demand was slowing. The value of nonresidential permits in Sioux Falls, S.D., fell dramatically in September from a year earlier; in contrast, September commercial permits increased substantially in Rochester, Minn. Residential construction was mixed. The value of September residential permits increased 70 percent and 40 percent, respectively, in Fargo, N.D., and the Minneapolis-St. Paul area from a year ago. Meanwhile, residential permits fell 78 percent and 38 percent in value in Rochester and Sioux Falls, respectively.\nCommercial real estate remained weak. In Minneapolis-St. Paul, about 20 percent of office space and 8 percent of retail space sat vacant in August. A commercial real estate broker in Fargo, N.D., said activity there was flat at low levels. Residential construction showed signs of stagnation. August closed home sales in Minneapolis-St. Paul fell almost 9 percent from a year earlier while prices decreased nearly 2 percent. In contrast, residential real estate contacts in Bismarck, N.D., described market activity there as busy.\nServices\nActivity in the professional business services sector increased since the last report. Appraisers and title companies reported continued strength during September. \"We are swamped with great projects,\" commented a design and advertising firm. Information technology consulting firms noted solid interest from corporate clients. Contacts from firms that advise small businesses on mergers and sales noted less-than-robust growth during the past month. Some architects reported a surprising increase in activity: \"We've weathered the storm and now find ourselves in calm waters,\" commented a large architectural firm.\nManufacturing\nManufacturing output was up since the last report. A September survey of purchasing managers by Creighton University (Omaha, Neb.) showed strong increases in manufacturing activity in Minnesota and South Dakota, and slight increases in North Dakota. In Montana, a food processing company is expanding operations and a jet engine plant plans to build a facility. In Minnesota, a fishing tackle company recently experienced a big pickup in demand, a metal fabricator saw increased orders, a dental part maker noted increased sales and a bed manufacturer's recent sales were up and higher than anticipated.\nEnergy and Mining\nActivity in the energy and mining sectors increased since the last report. Late-September oil exploration increased slightly from late-August. New wind energy projects are planned in the Dakotas. Most District mines were operating near capacity. Iron ore production in Minnesota increased in August compared with July. A Montana copper miner noted that \"we have been doing very well,\" and the short-term outlook was very positive.\nAgriculture\nAgricultural activity slowed due to wet weather. District crops were relatively large and in good condition. However, the cereal grains harvest in Montana was behind the pace of last year. Widespread wet conditions delayed some farmers from harvesting their bountiful crops. In addition, large amounts of rain in late September flooded rivers and saturated farmland from eastern South Dakota through western Wisconsin. Meanwhile, prices remained robust for many District agricultural products.\nEmployment, Wages, and Prices\nLabor markets showed some signs of picking up; however, overall weakness continued. A department store chain with locations in Minnesota noted that it expects to increase seasonal hiring, while another large retailer will soon open a store in Minnesota with plans to hire about 130 employees. A manufacturer in northwestern Wisconsin noted an increase in hiring due to stronger orders. Minnesota initial claims for unemployment insurance were down 20 percent in September compared with a year earlier. According to respondents to a recent St. Cloud (Minn.) Area Business Outlook Survey, 19 percent expect to increase staffing levels at their companies over the next six months while 20 percent expect to decrease staff. In last year's survey, 15 percent expected to boost hiring while 24 percent anticipated decreases. In contrast, a Minneapolis-area hospital recently announced plans to lay off 200 employees.\nWage increases remained modest. For example, a county government in the Minneapolis-St. Paul area will award most nonunion employees a 1 percent raise.\nOverall prices remained level. Minnesota gasoline prices were relatively stable since the last report. Residential natural gas prices were only about 5 percent higher than a year ago. However, scrap metal and plastic resin prices increased since the last report.\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 20, 2010\nThe pace of economic activity in the Seventh District picked up moderately in September. Contacts were generally more optimistic about the outlook for the remainder of the year and the beginning of 2011. Manufacturing production increased, and construction activity improved slightly. Consumer spending continued at a steady pace and business spending increased. Credit conditions continued to gradually improve. Price and wage pressures were moderate, while agricultural prices increased on balance.\nConsumer Spending\nThe pace of consumer spending was little changed from the previous reporting period. Contacts indicated that consumers were slowly regaining confidence, although they remain very price-conscious. As such, promotions and sales persisted as the primary driver of traffic in stores and showrooms. Retail sales excluding autos in September were nearly on par with the August sales pace. Clothing items continued to sell well, as did electronics and appliances; but furniture sales were again weak. Auto sales held steady even as fewer incentives were offered and access to credit continued to slowly improve.\nBusiness Spending\nBusiness spending increased in September. Capital spending rose as recent tax accounting changes pulled forward demand before the year's end. Contacts indicated that spending was heavily concentrated in replacement of older equipment and other efficiency improving investments. While less widespread, new investments in capacity, research and development, and employee training were also reported. In contrast, inventory rebuilding slowed. Both manufacturers and retailers reported comfortable levels of inventories in September, even though they remain relatively lean historically. The pace of hiring continued to be slow, but engineering, information technology, and healthcare were exceptions to this trend. Manufacturers' were reluctant to add permanent employees, continuing to use temporary hires instead. In addition, the manufacturing workweek leveled off, as firms pulled back on overtime. Contacts also noted that state and local government employment was sharply declining given the budgetary constraints faced by several District states and their local municipalities.\nConstruction and Real Estate\nConstruction activity improved slightly in September. With housing inventory still elevated, residential building was minimal, particularly for multifamily properties. A contact noted, however, that a few large builders had begun to rebuild their inventory of single-family homes after a recent uptick in contract signings. Attractive pricing led to higher showroom traffic, but contacts indicated that the limited availability of conventional mortgage financing remained a constraint for potential buyers. Private nonresidential construction remained subdued, particularly for office and retail buildings. However, rising vacancy rates leveled out in many areas of the District, and contacts reported small improvements in demand for large industrial and small retail facilities. Public infrastructure construction continued to expand.\nManufacturing\nManufacturing production increased in September, refreshing from the late summer pause. Several metals manufacturers reported that September sales were the best so far this year. Power generation, mining, and medical equipment manufacturers also reported an increase in orders. In addition, export activity continued to be robust with slower growth in developing countries in Asia and South America offset by strengthening demand from Europe. The automotive and heavy equipment sectors remained strong sources of growth. In contrast, a manufacturer of household appliances noted a reduction in fourth quarter production, and capacity utilization in the steel industry edged lower. Although contacts in some industries indicated that new orders and order backlogs had eased as inventory rebuilding slowed going into early October, manufacturers in general expressed a very positive outlook for the remainder of 2010 and early 2011.\nBanking and Finance\nCredit conditions continued to gradually improve in September. Contacts indicated that the corporate financing environment remains very favorable, but the availability of credit for small businesses remained a source of concern for some. Business loan demand was steady, driven mostly by refinancing and merger and acquisition activity. Recent tax law changes and increasing pressure from shareholders to productively employ the large amounts of cash on firm balance sheets were seen as contributing to the latter. Furthermore, a contact noted that private equity funds that are required to invest funds by year-end or return them to investors were another likely factor. Investment demand for distressed commercial properties remained strong. Moreover, limited improvement in the availability of bank loans for commercial real estate was noted, although it was concentrated among a few banks.\nPrices and Costs\nPrice and wage pressures were moderate in September. Retailers reported wholesale price increases were becoming more widespread. Prices also moved higher for industrial metals like copper, aluminum, zinc, and gold. Shortages of silicone and copper contributed to the increase in industrial metal prices. The depreciation of the dollar was cited as one of the primary drivers of higher demand for gold. Energy costs, in contrast, were steady with natural gas prices at historically low levels. Limited pricing power continued to constrain pass-through of cost pressures to downstream prices. Wage pressures again increased only modestly on balance, although some contacts highlighted large expected increases in the cost of healthcare for employees.\nAgriculture\nThe District harvest started early and progressed rapidly, although parts of Iowa and Wisconsin had a slower harvest due to heavy rains. Corn yields varied widely, sometimes even within the same field. The quality of the corn crop was, however, higher than a year ago. Soybean yields were reported as above-average in most of the District, with soybean disease issues in Iowa appearing to be limited in scope. Corn and soybean prices were above the levels of a year ago. Contacts indicated that farmers were selling soybeans, but holding on to newly harvested corn in the hope of even higher prices. Prices for milk, hogs, and cattle remained higher than last year, helping offset a sudden increase in feed costs for livestock. Fertilizer costs also increased, but drying costs for corn decreased substantially from the previous year.\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 20, 2010\nFeedback on economic activity in the Fifth District continued to be mixed since our last report. Activity at retail and services firms was, on balance, flat to down. Manufacturing activity also edged down over the last month, while port contacts gave mixed reports. Both residential and commercial real estate activity was mostly unchanged from the weak levels of the recent past, and several contacts stated that property values had stabilized. Activity in the banking sector improved modestly, however, led by gains in business lending and home refinancing. Tourism continued to strengthen in the District, with bookings increasing over the last month. Reports on labor markets varied, with permanent hiring flat to down and temporary employment picking up slightly. Price and wage growth in the services and manufacturing sectors remained subdued since our last report.\nRetail\nRetail activity generally softened since our last report, although a few contacts reported an uptick in sales. Several building supply retailers reported declining sales revenues, while a central North Carolina discount department store manager described sales revenues as \"steady.\" A store manager in West Virginia indicated that back-to-school sales were \"good, but not shooting off rockets,\" and a North Carolina department store wholesaler said business had picked up. However, a North Carolina furniture store manager said that local unemployment was causing him to sell at close to cost. Indeed, big-ticket sales, particularly among automobile dealers, fell sharply in our most recent survey. One exception was a car dealer in West Virginia, who reported that sales rose modestly. Recently polled retailers noted flat or declining customer traffic, although a representative of central Virginia merchants reported a modest increase in credit card use. Price growth strengthened somewhat at retail establishments, according to our District survey, while growth in average wages was little changed.\nServices\nBusiness activity at services firms weakened overall, although several services providers reported rising revenues. Demand for construction-related services was particularly soft, according to recent survey returns. A contractor commented that he was taking jobs without overhead or profit just to hold on to his subcontractors, while awaiting a pick-up in business. According to contacts at healthcare systems that we recently polled, consumer demand was steady, while changes required by healthcare reform had mixed effects on their budgets. In contrast, several high-tech firms reported stronger demand; executives expressed concern about the stability of the economy, however. Price change at services firms remained modest over the last month, according to our latest District survey, and average wages grew slightly. A couple of services providers stated that their wage increases were directed toward keeping key employees rather than toward standard, across-the-board increases.\nManufacturing\nDistrict manufacturing edged down in September after expanding for the last seven months, with reports of sharp declines that were partially offset by pockets of strength. Several textile and apparel contacts described their business as having \"no depth\" and noted that their customers expressed uncertainty about the direction of their business. A tire manufacturer reported that a backlog of orders had \"tanked\" and the company had cut production, noting that he did not expect any improvement for the rest of the year. A manufacturer of exterior doors for residential housing said that his firm had seen a sharp drop-off in orders and shipments over the last several months, with no indication that the trend might reverse. He anticipated that the housing and building products sector would be anemic in 2011. However, a furniture manufacturer reported an increase in orders and noted that his customers said that Labor Day sales were better than anticipated and held up throughout September. In addition, an auto parts supplier stated that orders remained strong and had increased slightly over the last month. Finally, our survey contacts reported that raw materials and finished goods prices, as well as wages, increased at a slower pace than in our last report.\nPort activity in the District over the last three months was mixed, with imports generally outperforming exports. Several port officials stated that imports at their facilities were up slightly in recent months, but exports had, at best, stabilized over the last few months. However, exports of commodities were up, according to one port authority, partly due to increased grain shipments to Russia and Pakistan. Several sources stated that the peak season had come and gone, with businesses ordering earlier than in past years and now becoming cautious about building inventory until they have a better sense of underlying demand over the remainder of the year. Some softness in shipping rates was noted at several ports, but one shipper reported that utilization rates of both ships and containers were \"getting back to full capacity.\"\nFinance\nLending activity around the District improved slightly, according to most bank contacts. Several bankers reported that the volume of new mortgage loans increased slightly in September, although one banking executive noted that most home loans went to people moving into the area. New mortgage activity at a major regional bank in the District, however, was reported as flat in recent weeks. Most bankers said that the bulk of mortgage lending was for refinancing, and one loan officer noted that refinancing activity stopped abruptly whenever the smallest uptick in mortgage rates occurred. Industrial loans were up slightly for equipment as well as inventory, according to one lender, while another banker reported very little commercial real estate lending. Several bankers stated that the competition among banks for quality loans was increasing. An officer reported that his bank had lowered rates to recapture auto dealer floor plan loans that had been lost to larger, more aggressive banks. An increase in merger and acquisition activity was widely reported. Several bankers cited examples of companies with strong balance sheets that were buying weaker competitors. Most bank officials reported improved credit quality, with a decline in both the number of foreclosures and late payments.\nReal Estate\nResidential real estate activity remained soft overall since our last report, despite some signs of a modest improvement. Several brokers reported that markets in their area were extremely slow, although they cited prices as generally stable. A market analyst reported that the number of houses that were under contract in Eastern Virginia was down more than 20 percent from a year ago, while active listings were up in excess of 10 percent. Moreover, the length of time needed to close a sale was increasing sharply. In contrast, a Realtor specializing in high-end properties noted that luxury homes in his area were selling, but only among properties that had been heavily discounted. And a broker from the Baltimore area reported a slight increase recently in the number of mortgage applications.\nCommercial real estate activity continued to be quite weak throughout most of the District since our last report, with most contacts reporting difficulty in obtaining loans for new projects. Several commercial Realtors indicated that financing was not only difficult, but also applications took an exceptionally long time to be processed. Moreover, local companies needed to be well funded to get loan approvals from banks. A Realtor in Central Virginia stated that both local and nationally based companies were less confident about expanding than they were a month ago. Leasing rates remained on a downward trend, according to several Realtors, with some firms trying to take advantage of lower rates to upgrade their office or retail location. In contrast to most other areas, the D.C. area showed signs of improvement, with one Realtor noting a pickup in office leasing activity. Another Realtor in that area reported that retailers were cautiously revisiting development plans that had been abandoned a year ago.\nTourism\nTourist activity strengthened since our last report. A contact along the District's coast reported solid bookings in recent weeks, with modest increases in the length of stay and the level of discretionary spending over the last month. A Myrtle Beach contact attributed the boost in visitations to increased spending on tourism promotion and infrastructure. In Virginia Beach, a hotel manager credited the gains in business at her hotel to recent renovations and increased group bookings. A contact on the Outer Banks of North Carolina indicated that discounting, coupled with a \"few value items thrown in\", had boosted tourism in her area and noted that restaurants and recreation venues were doing well. A manager at a mountain lodge in Virginia reported that sales of time shares rose and bookings had increased over the last month.\nLabor Markets\nAssessments of Fifth District labor market activity were varied. In the service sector, survey respondents reported moderate hiring at their firms. A contact at a central North Carolina healthcare system cited plans to hire a significant number of nurses and high-tech workers. Employment agencies reported somewhat stronger demand for temporary help in recent weeks, particularly in automotive and other manufacturing sectors. A branch manager of a temp agency in Raleigh, N.C., stated that manufacturing companies had openings for skilled positions, but the employee pools for those positions were weak enough to limit hiring. Moreover, survey respondents from most manufacturing industries indicated that employment generally edged down, while the average workweek flattened and wage growth slowed. Several retailers reported cutting positions in early September, but other merchants indicated that they were making no changes to employment.\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 20, 2010\nEconomic activity in the Twelfth District appeared to post further modest growth during the reporting period of September through early October, although conditions in many sectors remained weak. Price increases for final goods and services were quite limited, and upward pressures on wages were virtually nonexistent. Demand for retail items and services continued to strengthen somewhat, but sales remained lackluster overall. Manufacturing activity in the District firmed a bit further on balance. Sales were robust for agricultural products, while demand was largely stable for energy resources. Activity in District housing markets remained sluggish, and demand for commercial real estate stayed weak. Contacts from financial institutions reported largely stable lending activity.\nWages and Prices\nUpward price pressures were very limited on net during the reporting period. Commodity prices changed little in general, with the exceptions of continued increases in grain prices and rising prices for metals, particularly copper. Contacts pointed to very limited pricing power for most retail items and service categories, as final prices continued to be held down by weak demand and extensive competition.\nUpward wage pressures were largely absent, although reports pointed to further increases in the costs of employee benefits, particularly health care. High unemployment and limited demand for new employees held down compensation gains in most regions and sectors. Contacts in most sectors expect that ongoing productivity gains and cost efficiencies will largely offset the need for staffing increases in the near term. However, a few contacts noted that some firms have reached the limits of productivity gains from current staff and will need to add workers as product demand improves.\nRetail Trade and Services\nRetail sales remained sluggish but improved somewhat on balance. Both traditional department stores and discount retail chains reported modest improvements in sales, although somewhat elevated inventories were noted; moderately priced items such as selected home and garden products reportedly saw the strongest gains. By contrast, retailers of major appliances and furniture reported a further slowdown in activity and expressed pessimism for a reversal over the remainder of the calendar year. Grocery sales were characterized as largely flat, with consumers focused on bargains, and grocers do not anticipate any change in customer buying patterns for the foreseeable future. Sales of new domestic and imported automobiles improved a bit, with dealers citing replacement of broken-down or leased vehicles as key motivating factors for purchases.\nDemand for services continued to improve modestly. Sales grew for providers of technology services, spurred in part by business investments to enhance production efficiency. Contacts in the restaurant and food services industry noted continued slight gains in activity. Demand for professional, media, and entertainment services held largely steady overall. Providers of energy services reported increased deliveries to businesses and households, and activity picked up somewhat for providers of trucking services. Conditions in the District's travel and tourism sector improved further. Visitor volumes and hotel occupancy rates rose in several of the District's major markets, spurred largely by significant growth in business travel and convention activity.\nManufacturing\nDistrict manufacturing activity expanded further on balance during the reporting period of September through early October. For manufacturers of semiconductors and other technology products, demand continued to grow, although the pace of growth slowed a bit and inventories rose slightly. Extensive order backlogs continued to keep production rates at or near capacity limits for manufacturers of commercial aircraft and parts. Demand firmed further for metal fabricators, although capacity utilization remained well below normal. Activity at petroleum refineries slowed a bit and inventories rose, as seasonal declines in domestic demand were only partly offset by increased overseas demand. Conditions in the wood products industry remained depressed.\nAgriculture and Resource-related Industries\nSales of agricultural products continued at a brisk pace, and demand appeared to hold steady on net for natural resources used for energy production. Final sales and orders for most types of agricultural products continued to be robust, and input costs stayed largely stable. Unfavorable weather conditions and consequent supply restrictions for overseas producers have boosted sales for domestic producers of corn and food grains. Demand for crude oil fell slightly, largely as a result of the normal end-of-summer lull, but extraction activity for natural gas rose further.\nReal Estate and Construction\nHousing demand in the District appeared to be little changed from the previous reporting period, and demand for commercial real estate remained largely stable at very low levels. The pace of home sales continued to be mixed across areas but mostly unchanged on balance. In response to sluggish sales, new home construction has stayed quite subdued, although contacts reported slightly expanded activity for home repairs and remodeling. Conditions in commercial real estate markets generally remained weak, as vacancy rates stayed at very high levels in many parts of the District. Although slight declines in total space availability were reported for some areas, tenants continued to receive rent concessions and other favorable terms in many cases.\nFinancial Institutions\nReports from District banking contacts indicated that loan demand was largely unchanged compared with the prior reporting period. Demand for commercial and industrial loans continued to be restrained by businesses' cautious approach to capital spending and desire to deleverage. Consumer loan demand also remained weak overall, although contacts noted an uptick in demand for nonconforming mortgage loans. While lending standards stayed relatively restrictive for business and consumer lending, the reports suggested some loosening of credit standards for select groups of borrowers. Contacts also pointed to an uptick in financing for corporate acquisitions as well as further modest expansion in IPO activity.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Philadelphia

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"Beige Book Report: Philadelphia\nSeptember 8, 2010\nBusiness conditions in the Third District have been mixed since the last Beige Book. Manufacturers, on balance, reported slight decreases in shipments and new orders in August. Retailers posted seasonal increases in sales as well as year-over-year gains. Motor vehicle dealers also generally posted year-over-year gains but indicated that sales have been only steady in recent weeks. Third District banks reported steady loan volume outstanding in the past few weeks. Residential real estate agents and homebuilders said that there has been no rebound from the sharp drop in home sales that followed the expiration of the federal tax credit for purchases. Contacts in the commercial real estate sector said there has been practically no change since the last Beige Book in the generally weak market conditions around the District. Service-sector firms reported mostly flat or very slight increases in activity since mid-summer. Business firms in the region indicated that prices of most goods and services have been steady, although there continued to be reports of increased prices for some metals and wood products. Several retailers said they were receiving indications from suppliers that wholesale prices will be increased toward the end of the year.\nThe outlook among Third District business contacts is positive but not strong. Manufacturers forecast a rise in shipments and orders during the next six months. Retailers expect sales to expand slightly but see no signs that the pace of growth will quicken. Bankers expect little or no growth in lending in the near term. Contacts in both residential and commercial real estate expect flat activity during the rest of the year. Service-sector companies expect slow growth for the rest of the year.\nManufacturing\nThird District manufacturers reported slight decreases in shipments and new orders from July to August, on balance, as well as a decrease in order backlogs. Slower activity was reported in most of the major manufacturing sectors in the District. However, producers of wood products, food products, industrial materials, and measuring and testing equipment reported increased demand for their products.\nThird District manufacturers expect business conditions to improve during the next six months, on balance. Among the firms surveyed in August, about 40 percent expect increases in new orders and shipments, and about 20 percent expect decreases. Capital spending plans among area manufacturers remain positive, overall, but are not strong. About one-third of the firms polled in August plan to increase expenditures for new plant and equipment, and about one-fifth expect to reduce spending. Several manufacturing executives indicated that uncertainties about economic conditions and policies were deterring advances in business activity. One noted that, \"There is no sign of sustainable improvement in demand, so we remain cautious about inventories, capital spending, and hiring.\" Another said, \"Investment spending is not increasing because of concern about tax increases on business owners.\"\nRetail\nThird District retailers reported that sales rose from July to August for the back-to-school shopping period, and most of the stores surveyed posted year-over-year gains for the period. Store executives continued to note that much of the year-over-year improvement in sales has been a consequence of last year's poor results; nevertheless, many said the fundamental trend in sales was beginning to strengthen. Some merchants noted relatively healthy sales of apparel and small appliances, albeit with significant discounting, but weak sales of big-ticket consumer electronic products. Most store executives described inventories as being in line with current and expected sales. Looking ahead, most of the retailers contacted for this report said they expected modest growth in sales through the end of the year. The consensus was reflected in the comment of one store executive, \"We are in a recovery, but it will not get stronger until employment increases.\"\nThird District auto dealers reported roughly steady sales during July and August at a rate somewhat above the year-ago pace. Dealers expect sales to continue to run at about the current rate for the rest of the year. However, some dealers said manufacturers' incentives are supporting sales of current model-year vehicles, and sales could slip when that supply is depleted and replaced by new model-year vehicles.\nTourism officials and industry executives in the region generally reported increased activity compared with last year, although most noted that overall business remained below the levels of 2007 and 2008. Contacts indicated that travel and tourism revenue was only modestly above the year-ago level as lower spending per person partially offset increased numbers of people visiting the region's tourist attractions.\nFinance\nTotal outstanding loan volume at most of the Third District banks contacted for this report has been virtually level since the last Beige Book. Commercial bank lending officers said there has been a slight increase in credit extended on home equity lines, but practically no change in outstandings in other credit categories. Bankers continued to report low demand for both consumer and business loans. \"It's still a deleveraging story,\" one banker said. Commercial bank officers indicated that credit quality has been steady or has improved slightly since the last Beige Book.\nLooking ahead, Third District bankers expect little, if any, growth until both consumer and business confidence strengthen. Some bankers said business lending could begin to move up in the near term, but the consensus was that loan growth overall will be slight until there are clear signs that economic conditions are improving.\nReal Estate and Construction\nContacts in residential real estate markets reported that the low rate of sales that took hold after the expiration of the federal income tax credit for home purchases has persisted into July and August for both new and existing homes. For both new and existing homes, contacts reported little change in prices, and they noted that lower-priced homes continued to sell at a relatively better pace than higher-priced homes. Residential real estate contacts expect sales to remain slow during the fall and winter. Although the inventory of homes for sale has not changed much recently, some contacts expect an increase in the spring of next year. One agent said, \"A lot of people who don't need to sell right now have taken their homes off the market, and they will probably jump back in as soon as the market appears to be coming back.\"\nNonresidential real estate firms indicated that there has been little change in commercial and industrial markets since the last Beige Book. Contacts reported that purchases of income-producing properties by investors have picked up somewhat, but they said that commercial construction activity remains very slow, and there are few, if any, indications that new projects will be started in the near future. Commercial real estate contacts expect market conditions to show little change for at least the rest of the year. They believe that recent increases in available space are likely to restrain lease rates and, as one said, \"Put a damper on future construction.\"\nServices\nService-sector firms generally reported minimal gains or flat rates of activity since the previous Beige Book. A large business services firm reported that client companies were not contracting for as much business as they had indicated earlier in the year. Several health-care organizations noted recent flattening in activity that is interrupting a long growth trend. In contrast, some temporary employment agencies noted that demand had picked up recently. Looking ahead, most of the services firms contacted for this report expect growth to be slow for the rest of the year. Some have reduced their forecasts; as one contact said, \"It looks like we were a little too optimistic earlier this year.\"\nPrices and Wages\nReports on input costs and output prices indicate little change since the last Beige Book. Most of the manufacturing firms polled in August reported no change from July in the costs of the commodities they use or the products they make. However, producers of primary metals and wood products raised prices. Construction firms gave mixed reports on prices, with some noting steady materials costs and some indicating increases for a variety of materials. Retailers generally noted that both wholesale costs and retail prices have been mostly steady, although several indicated that they expect wholesale price increases from their suppliers during the fourth quarter of this year.\nBusiness firms in the region reported no significant change in wages. Employment agencies reported that client companies have begun to fill positions that have been open but do not appear to be adding employees. Some staffing firms said client companies are looking to rely more on temporary and contract workers to meet variable and uncertain workloads, rather than hiring permanent employees.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Minneapolis

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"Beige Book Report: Minneapolis\nSeptember 8, 2010\nThe Ninth District economy grew modestly since the last report. Consumer spending, tourism, residential construction, services, manufacturing, energy, mining and agriculture saw increases. Activity in the commercial and residential real estate sectors decreased, while commercial construction remained weak. Labor markets strengthened slightly since the last report. Wage increases were moderate, and prices increased modestly.\nConsumer Spending and Tourism\nRetail spending increased moderately. A major Minneapolis-based retailer reported that same-store sales in July were up 2 percent compared with a year earlier, and a Minnesota-based restaurant chain reported that recent sales increased moderately compared with a year ago. July sales at two Minneapolis area malls were above year-ago levels, and mall traffic seemed to hold steady during August. A retailer in Montana noted that sales for appliances and electronics were up about 10 percent compared with a year ago. In southwestern Montana, a furniture store reported that recent sales increased; however, sales at a lumber and home improvement retailer were down. A chamber of commerce representative in northwestern Wisconsin noted that while retail sales had been tracking downward compared with a year ago, there was a recent pickup due to solid tourism activity.\nVehicle sales were up slightly in North Dakota, according to a representative of an auto dealers association. The owner of a Minnesota domestic auto dealer said that August sales were up from a year ago, but corporate customers were more cautious about purchases.\nSummer tourism activity was solid. Resorts in north-central Minnesota reported that lodging revenue was up about 10 percent on average compared with a year ago; restaurants also saw strong increases. Tourism activity was above year-earlier levels in North Dakota, according to an official. In western South Dakota, the number of visits and sales at attractions were on par with last year's strong summer season. Visits to Yellowstone and Glacier national parks were higher than a year ago, but on average tourists were spending less.\nConstruction and Real Estate\nCommercial construction was slow. Few large projects were under way in the Minneapolis-St. Paul area. Commercial permits in Montana were at about half of their year-ago levels for both June and year-to-date. Commercial building in Fargo, N.D., has recently slowed despite a relatively low unemployment rate in the area. Residential construction continued its mild recovery. The number and value of August residential permits in Minneapolis-St. Paul increased from both July and June levels. The value of residential permits in Sioux Falls, S.D., was roughly flat in July from a year earlier.\nActivity in commercial real estate markets was down. A commercial brokerage in Minneapolis said that while unused space continued to increase, the rate of increase seemed to have slowed recently. Vacancy rates there were at record highs; the retail sector was particularly hard hit. A bank director in Billings, Mont., said market activity there was down substantially and was expected to continue to drop. Recent residential real estate activity decreased from a year earlier. July closed sales in Minneapolis-St. Paul were down 40 percent from a year earlier; however, median sales prices were up more than 2 percent.\nServices\nActivity in the professional business services sector increased since the last report. Contacts from the legal sector reported that billings during July were up from a year ago, especially for firms that deal with bankruptcies. A call center is expanding in South Dakota. Appraisers and other professional services firms that support home refinancing reported strong activity over the past month.\nManufacturing\nManufacturing output was up since the last report. A July survey of purchasing managers by Creighton University (Omaha, Neb.) showed strong increases in manufacturing activity in Minnesota and South Dakota, and slight increases in North Dakota. A drainage pipe maker is opening a plant in South Dakota. In Minnesota, two new solar energy component manufacturing facilities are planned. In the Upper Peninsula of Michigan, a coated paper company noted an increase in orders over the past two months from earlier this year and last year.\nEnergy and Mining\nActivity in the energy and mining sectors increased since the last report. Late-August oil exploration increased from mid-July. New wind energy projects are planned in the Dakotas. Most District mines were operating at near capacity. Iron ore production in Minnesota increased in July compared with June. Meanwhile, in the Upper Peninsula, a new copper mine was under construction. A new coal mine was under consideration in Montana. Exploration for a potash mine was under way in North Dakota.\nAgriculture\nAgricultural activity increased. Crop conditions improved across most of the District. The price of wheat surged since the last report. Sugar beet producers expected an early harvest with large yields, but were concerned about a judge's ruling to halt the use of GMO seeds until the conclusion of an environmental impact study. Meanwhile, the Minneapolis Fed's second-quarter (July) survey of agricultural credit conditions indicated that lenders expect overall agricultural income and capital spending to decrease in the third quarter.\nEmployment, Wages, and Prices\nLabor markets strengthened slightly since the last report. After 25 straight months of year-over-year employment decreases in Minnesota and Wisconsin, both states recently posted modest year-over-year employment increases. Initial claims for unemployment insurance in Minnesota were down 24 percent in July compared with July 2009, but were still higher than July 2008 levels. A temporary staffing firm in Minnesota noted that demand for industrial workers was even in July, but has picked up somewhat in August.\nDespite recent strengthening, overall labor market conditions remained weak. In Minnesota, a hospital recently announced plans to eliminate up to 250 full-time positions by year-end. Two Minnesota state universities announced layoffs of almost 40 tenure-track faculty in anticipation of future funding cuts. There were plenty of qualified applicants available to fill open positions in Montana. In addition, fewer foreign workers were needed to fill seasonal jobs in Montana this past summer compared with a year ago.\nWage increases were moderate. Average wages for manufacturing employees in District states for the three-month period ended in July 2010 were only 1 percent higher than the same period a year ago. A nurses union in Duluth, Minn., called for a one-day strike; staffing levels were the primary issue. In Montana, a bank director noted that a number of employers were uncertain about their obligations under the new health care system and therefore were hesitant to make long-term commitments regarding benefits.\nOverall prices increased modestly. Minnesota gasoline prices decreased slightly from mid-July through the end of August. Fertilizer prices were lower than a year ago. Meanwhile, prices for copper and lead increased from mid-July through the end of August.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Kansas City

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"Beige Book Report: Kansas City\nSeptember 8, 2010\nGrowth in the Tenth District economy was modest in late July and August. Consumer spending increased slightly from the previous period, and high-tech and transportation firms reported moderate growth. Energy activity continued to expand solidly, and agricultural conditions improved with higher crop prices. Manufacturing production was flat, and factory orders declined slightly. The downturn in commercial real estate eased somewhat, while residential real estate markets weakened further. Bankers reported steady loan demand and an unchanged outlook for loan quality. Business contacts were moderately optimistic about future sales, but few planned to change employment or capital spending levels in the months ahead. Retail prices were largely unchanged from the previous survey, and wage pressures in most industries remained limited due to soft labor markets.\nConsumer Spending\nConsumer spending rose modestly from the previous survey, and contacts expected further growth in the months ahead. Retail sales edged higher and were above year-ago levels at a majority of stores and malls. Purchases of energy-saving appliances and clearance items were reported as strong at several stores, while sales of luxury items such as jewelry and dining room sets were generally characterized as weak. Store inventories rose somewhat, but most contacts were satisfied with current stock levels. Auto sales also increased slightly from the previous period, and nearly all dealers were optimistic about future sales. Auto inventories continued to decline, and some dealers were concerned about meeting expected demand as a result. Restaurant sales rose solidly from the previous period, and travel and tourism activity continued to improve. Several resort contacts in Colorado anticipated a considerable rebound for the upcoming ski season, following weakness last winter.\nManufacturing and Other Business Activity\nManufacturing activity slowed in late July and August, while other business activity continued to expand. Factory production was flat compared to previous months, while shipments and new orders weakened. A producer of chemicals said distributors were only placing orders for product as needed and were unwilling to bring in inventory due to high levels of economic uncertainty. Growth in transportation services moderated slightly from previous surveys but remained solid, and a major supplier of diesel fuel reported continued solid sales. Most high-tech services firms reported strong growth in sales, although a few contacts noted softened demand. Business firms' expectations for future sales eased somewhat from the previous period but remained positive. Capital spending plans for the rest of the year remained essentially flat, with most firms citing economic uncertainty as the primary reason.\nReal Estate and Construction\nResidential real estate activity dropped sharply in late July and August, but the downturn in commercial real estate activity lessened somewhat. Housing starts declined, with several builders noting continued financing difficulties. Expectations for future homebuilding remained weak, although one Colorado contact believed a floor seemed to be forming in that state. Residential construction supply firms also reported a drop in sales. Home sales plummeted from the previous survey, especially for higher-priced homes, and home inventories rose across the District. Real estate agents blamed the steep drop in home sales on expired tax credits and increased customer uncertainty, and most expected little improvement in the near future. Mortgage lenders reported that overall mortgage demand improved slightly from last month, primarily due to a continued rise in refinancing loans. The downturn in commercial real estate stabilized somewhat in late July and August, but most contacts expected little improvement in coming months. Vacancy rates and leasing activity were flat compared to the previous survey, while construction fell further. Office prices and rents also continued to decline. Many commercial real estate contacts cited continued financing difficulties and high economic uncertainty among customers.\nBanking\nBankers reported steady loan demand, stable deposits, and an unchanged outlook for loan quality. Overall loan demand was little changed after edging up in the previous survey. Demand was also stable in all major loan categories. As in previous surveys, a few banks tightened standards on their commercial real estate loans. However, credit standards on other types of loans were unchanged. Slightly more bankers reported an improvement in loan quality from one year ago than reported deterioration. Also, for the third straight survey, respondents expected no change in loan quality over the next six months. Deposits were flat, continuing the pattern since late last year.\nEnergy\nEnergy activity expanded further in late July and August. Virtually all contacts reported an increase in drilling activity, especially for oil, and were optimistic about the months ahead. Crude oil prices remained relatively profitable, and firms drilling for liquids in western Oklahoma were reported as operating at full capacity. However, several producers expressed concerns about low natural gas prices and potentially negative implications of proposed energy legislation. Natural gas prices eased in August, and most producers did not expect sizable increases in prices until well into 2011, due to ample supply and average demand.\nAgriculture\nAgricultural conditions improved since the last survey period. The winter wheat harvest finished with above average yields. The majority of the corn and soybean crops were rated in good or better condition, though with isolated reports of heat stress, storm damage, and insect infestation. Crop prices rose on prospects of lower global grain supplies and Russia's ban on grain exports, boosting farm income expectations. Livestock prices generally held steady but higher feed costs narrowed profit margins. Farmland values rose further on strong demand from farm and non-farm buyers and a limited supply of land for sale during the growing season. However, the prospect of higher capital gains taxes in 2011 has prompted some farm owners to consider selling their farms before year-end. Agricultural credit conditions generally held steady.\nWages and Prices\nConsumer prices were generally unchanged from the previous survey, and wage pressures in most industries remained subdued. Several manufacturers reported continued increases in materials prices, but only a few planned to raise finished goods prices. Construction supply firms reported declines in selling prices, which they generally expected to continue. The downward trend in overall retail prices in recent surveys flattened out slightly, and most contacts expected steady prices heading forward. Services firms reported no change in the prices charged to customers. Wage pressures were still contained in most industries, with labor markets remaining soft. However, some energy firms, auto dealers, and transportation firms reported a slight uptick in wage pressures due to difficulties finding qualified workers. Longer-term hiring announcements continued to rise, but near-term hiring plans generally remained modest.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

San Francisco

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"Beige Book Report: San Francisco\nSeptember 8, 2010\nEconomic activity in the Twelfth District appeared to expand modestly during the reporting period of mid-July through the end of August. Upward pressures on prices and wages were quite limited. Sales of retail items and services were mixed but grew on balance. District manufacturing activity firmed a bit further, with continued strength evident for manufacturers of information technology products. Agricultural producers reported robust sales, and demand strengthened further for energy resources. Activity in District housing markets continued to slide, while demand for commercial real estate remained weak. Contacts from financial institutions reported slight declines in lending activity but further improvements in credit quality.\nWages and Prices\nUpward price pressures remained very limited on net during the reporting period. Commodity prices in general were largely stable, with the exception of rising grain prices and pronounced short-term volatility in oil prices. Excess capacity and extensive competition continued to hold down final prices for most retail items and service categories. The primary exception was health care, for which prices continued to rise. Looking forward, contacts in general anticipate that prices for their products will change little over the balance of 2010.\nUpward wage pressures were largely absent, as high unemployment and limited demand for new employees held down compensation gains in most regions and sectors. Contacts continued to report significant increases in the costs of employee benefits, most notably for health insurance. Reports indicated that most businesses remain cautious in their approach to hiring and continue to rely on improved productivity rather than increased employment as a means to expand output.\nRetail Trade and Services\nRetail sales were mixed. Traditional department stores and discount retail chains alike reported further sales increases for small household items, with generally balanced inventories noted. By contrast, sellers of major appliances and furniture reported a slowdown and \"difficult\" conditions in July and August. Grocers reported largely flat sales and noted an ongoing shift towards less-expensive generic labels. Sales of new domestic and imported automobiles improved near the beginning of the reporting period but slowed subsequently. Used vehicle sales improved marginally, while dealers faced a limited supply that kept inventories tight.\nDemand for services improved modestly on balance but remained lackluster overall. Demand for professional, media, and entertainment services was mixed across sectors but appeared to be largely stable at low levels on net. Providers of energy services reported stronger demand for industrial use, with the exception of wood products. Contacts from around the District noted increased business travel and tourism activity, as reflected in higher visitor volumes, hotel occupancy rates, and airline passenger miles, although visitor spending remained weak. Providers of health-care services reported that demand slipped somewhat, which they attributed in part to rising postponements or cancellations of elective procedures and routine tests by individuals who lack health insurance.\nManufacturing\nDistrict manufacturing activity generally continued to grow during the reporting period of mid-July through the end of August. Demand strengthened further for manufacturers of semiconductors and other technology products, with high levels of capacity utilization and balanced inventories noted. While new orders remained limited for makers of commercial aircraft and parts, extensive order backlogs kept production rates near capacity limits. Activity at petroleum refineries rose in response to increased demand, although inventories remained at elevated levels. Food manufacturers reported further growth in sales. By contrast, demand for wood products deteriorated, reportedly as a result of a slowdown in new home construction as well as residential repair and remodeling activity.\nAgriculture and Resource-related Industries\nDemand remained strong for agricultural products and improved further for natural resources used for energy production. Orders and final sales continued to be robust for assorted crops and livestock products. Contacts generally noted stable input costs and supply conditions, although unseasonably cool weather in parts of California compressed the growing seasons for some crops. Oil extraction activity expanded further as a result of recent increases in global demand, and strong demand for natural gas caused the number of rigs in service to rise.\nReal Estate and Construction\nHousing demand in the District weakened somewhat from the previous reporting period, while demand for commercial real estate remained largely stable at depressed levels. The pace of home sales continued to be mixed across areas but fell on balance, and contacts noted that the slowdown in home sales has placed renewed downward pressure on new home construction. Despite sluggish sales activity, home prices edged up further in some parts of the District. Demand for commercial real estate remained at very low levels, as reflected in elevated vacancy rates and subdued leasing activity for office and industrial space in many parts of the District. However, one contact reported further increases in the sales prices of selected commercial properties in some areas.\nFinancial Institutions\nDistrict banking contacts reported that loan demand slipped somewhat. Commercial and industrial loan volumes waned a bit, reportedly restrained by businesses' cautious attitudes towards capital spending stemming from their uncertainty about the future economic environment. While a majority of respondents across all industries indicated that they anticipate no change in the pace of economic growth in their respective industry or area in the second half of the year compared with the first, most of those who do expect a change foresee a slowdown as opposed to a pickup. Consumer loan demand also remained weak overall. By contrast, venture capital financing continued to be a bright spot, with contacts noting increased levels of funding, as well has heightened IPO activity. Although contacts noted slight improvements in overall credit quality, lending standards stayed relatively restrictive for business and consumer lending.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Richmond

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"Beige Book Report: Richmond\nSeptember 8, 2010\nSigns of slowing or contracting economic activity became more prevalent in the Fifth District since our last report. Manufacturing activity continued to expand, but a slowdown in the pace of expansion that began several months ago continued into August. Tourism also improved, although discounting was often needed to attract visitors. We received mixed reports of activity at services-providing firms, while retailers reported flat-to-weakening sales over the last month. The financial and real estate sectors generally remained soft, with several reports by residential Realtors indicating further declines in both closed and pending home sales in recent months. The agricultural sector enjoyed increased rainfall, but the benefits were too late for some crops. Survey respondents in the retail sector cited cuts in the number of permanent job hires, but temp agencies noted increased demand for workers from the manufacturing sector.\nRetail\nRetail sales sputtered in August, with most merchants reporting either flat or contracting activity. Sales declined at several building supply businesses as well as lawn and garden retail establishments. An executive at a hardware store chain in central Virginia commented that sales were flat, and he had redistributed inventory across store locations as part of an ongoing cost reduction plan to survive the weak housing market. The store manager for a discount chain store in central North Carolina reported erratic apparel sales; however, he and several other retailers were relieved that early results from back-to-school sales on other items were at least satisfactory. Although grocery store sales generally grew, an executive at a Southwestern Virginia location reported that \"margins are under constant pressure.\" Big-ticket sales remained weak, according to several contacts. A car dealer in the Tidewater area of Virginia and another in the South Carolina Piedmont indicated that their dealerships were seeing gradual improvement. However, contacts at other dealerships reported a slowdown in sales. In addition, several contacts at department stores expressed worry about soft holiday sales later this year. Our survey respondents indicated that retail price growth was moderate; average wages in the service sector rose.\nServices\nServices-providing firms also gave mixed reports. Contacts at healthcare organizations noted that demand was typical for the summer, while airport officials and electrical contractors saw a small increase in demand for their services. A telecommunications contact reported accelerating revenues, while several administrative-support firms cited flat or slowing revenue growth. Local officials in Norfolk, Virginia noted that a recently announced shut-down of major military facilities would affect a large number of civilian contractors. Community leaders indicated that they will be vying for other military projects. Price growth slowed slightly at services firms in recent weeks, according to survey respondents.\nManufacturing\nDistrict manufacturing activity continued to expand in late July and August, but some sources indicated a slowdown in demand over the last month. A chemical manufacturer commented that new equipment was being installed at his company with the expectation that the economy would continue to grow. Moreover, a packaging manufacturer informed us that demand was stronger at his company, and a parts supplier indicated that raw material inventories had decreased and his suppliers were having a hard time keeping up with demand at his firm. He added that his company was working Saturdays to meet demand and that inventories of finished goods remained below desired levels. A majority of survey respondents reported that shipments, new orders, and employment continued to grow, but at a slower pace than a month ago. Some declines were reported; for example, a manufacturer of exterior doors for residential housing said that all activity had ground to a halt in the building products industry. He noted that the slowdown started in May and continued through August.\nFinance\nBanking was widely described by contacts as weak and relatively unchanged since our last assessment. Several bankers noted that consumer loan demand remained soft, as consumers continued to reduce debt, and mortgage demand centered mostly on refinancing with existing clients. Small business loan demand was also described by most contacts as soft, as firms struggled with weak demand. One community bank official stated that auto dealers had difficulty obtaining floor-plan loans, even though they needed more inventory to support the current sales rate. A bank economist reported some improvement in equipment expenditure financing, which was mostly to replace out-dated technology and not to increase capacity. Tighter controls on credit cards, such as higher fees on overdrafts, were cited by one banker as limiting consumers' credit card usage. Credit quality was mostly unchanged, with several bank contacts noting no increase in delinquencies or late payments.\nReal Estate\nReal estate markets remained weak over the last four to six weeks. There were more reports of declining activity, especially in the residential sector. For example, several Realtors indicated that closed sales were flat to down in July and pending sales dropped in August both from a year-ago and on a seasonally adjusted month-over-month basis. Moreover, the home sales that did occur were dominated by foreclosure and short sales. A housing expert in the Hampton Roads area of Virginia stated that, with mortgage rates low and prices still falling, buyers were very picky and in no hurry to close deals. Several Realtors complained about buyers having more difficulty obtaining financing and about the amount of time required to get mortgage loan approvals. One Realtor stated that sales activity would benefit substantially if banks could speed up the process. Most Realtors cited continuing declines in home prices. Most Realtors said that the high-end market was extremely sluggish and often limited to corporate relocations. In contrast, however, a Realtor in the greater Washington, D.C. area reported that July sales were stronger than expected and that homes below $250,000 generally moved quickly.\nOn the commercial side, construction remained soft and there was continuing downward pressure on rents. Several commercial Realtors stated that both uncertainty about the economy and confusion about recent reforms were key factors in holding back sales and construction. Most contacts noted that vacancy rates were still rising. One developer attributed less demand for new building space from small business startups to the fact that laid-off workers were facing diminished savings due to the severe stock market and real estate slumps. In addition, a paving materials supplier reported that local sales of crushed stone, which is used as a base for laying concrete and other paving materials, were non-existent. State and local governments cut back construction projects as well, according to contacts.\nTourism\nTourist activity strengthened across the District since our last report. Along the District's coast, a contact in Myrtle Beach said that visitations were up in recent weeks, compared to a year ago, with slightly longer stays. Considerable increases in discretionary expenditures also positively affected the retail and hospitality sectors. However, reports from Baltimore, Washington, and Charleston, S.C. indicated that, while tourism picked up, stays were shorter and spending was lower than in the past. A manager from Virginia Beach also stated that, even though hotel bookings were up, vacationers were shortening their length of stay. A contact from Charleston, S.C. mentioned that hotel occupancy was up substantially from a year ago, although hotels were discounting to get people \"in the door.\" People were often described as \"taking staycations\"-- visiting nearby attractions, such as theme parks, museums, and historical areas, rather than taking vacations away from home. Contacts both along the seaboard and at mountain resorts reported that bookings for the Labor Day weekend were stronger than a year ago.\nLabor Markets\nReports on Fifth District labor market activity was generally mixed in recent weeks. In service sector labor markets, survey respondents said that hiring was flat at services-providing firms, while retail job cuts were widespread. However, survey respondents from most manufacturing industries indicated continued mild expansion of employment and weekly production hours, but average wages slowed. Several contacts at temporary employment agencies reported generally stronger demand for temporary help since our last report, particularly in manufacturing. For example, a contact at an automotive plant told us that they had hired both additional full-time employees and temporary labor. Increased demand for temporary workers was reported by a wide array of service industries, including professional services, life sciences, banking, health care, and government.\nAgriculture\nIn many sections of the District, soaking rains helped to refresh crops and improve pasture conditions. It was too late for corn, however, and in some areas of Virginia farmers shifted drought-stricken corn fields to cover crops and small grains. Analysts in Virginia reported that the corn harvest had very poor yields. Elsewhere in Virginia, flooding resulted in damage to silage corn, tobacco, vegetables, and both standing and baled hay. In contrast, the corn harvest was ahead of schedule in the Carolinas, although heavy showers hampered field work for some growers in both states. In West Virginia, pasture conditions ranged from very poor to excellent, but most fields were reported to be in fair to poor condition. Also, cattle producers in Virginia continued to cull herds due to reduced feed supplies. On a brighter note, ninety-four percent of peaches had been harvested in South Carolina, and the watermelon and cantaloupe harvest was nearing completion in that state. In Maryland, the peach harvest was 80 percent completed and apples were 20 percent harvested.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

National Summary

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"Beige Book: National Summary\nSeptember 8, 2010\nPrepared at the Federal Reserve Bank of San Francisco based on information collected on or before August 30, 2010. 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 suggested continued growth in national economic activity during the reporting period of mid-July through the end of August, but with widespread signs of a deceleration compared with preceding periods. Economic growth at a modest pace was the most common characterization of overall conditions, as provided by the five western Districts of St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco. The reports from Boston and Cleveland also pointed to positive developments or net improvements compared with the previous reporting period. However, the remaining Districts of New York, Philadelphia, Richmond, Atlanta, and Chicago all highlighted mixed conditions or deceleration in overall economic activity.\nConsumer spending appeared to increase on balance despite continued consumer caution that limited nonessential purchases, while activity in the travel and tourism sector picked up relative to seasonal norms. Activity was largely stable or up slightly for professional and other nonfinancial services. Reports on manufacturing activity pointed to further expansion, although the pace of growth eased according to several Districts. Agricultural producers and extractors of natural resources reported continued gains in demand and sales. Home sales slowed further following an initial drop after the expiration of the homebuyer tax credit at the end of June, prompting a slowdown in construction activity as well. Demand for commercial real estate remained quite weak but showed signs of stabilization in some areas. Reports from financial institutions pointed to generally stable or slightly lower loan demand and noted some modest improvements in credit quality.\nUpward price pressures remained quite limited for most categories of final goods and services, despite higher prices for selected commodities such as grains and some industrial materials. Wage pressures also were limited, although a few Districts noted increased upward pressures in a narrow set of sectors experiencing a mismatch between job requirements and applicant skills.\nConsumer Spending and Tourism\nReports on consumer spending were mixed but suggested a slight increase on balance. Most Districts reported that non-automotive retail sales rose compared with the previous reporting period or were above their levels from 12 months earlier. By contrast, Atlanta reported a decline in the level of sales, and Richmond noted that sales \"sputtered\" in August, while New York and Dallas reported that growth in retail sales slowed. Several Districts noted an emphasis on necessities and lower-priced goods. Boston reported that back-to-school purchases were focused on immediate needs; in Cleveland, consumers focused on \"value-priced seasonal items;\" and in St. Louis, Kansas City, and San Francisco, sales were relatively stronger for lower-priced items. Spending on big-ticket items such as expensive consumer electronics was weak according to Philadelphia, Richmond, and Dallas. Most Districts also reported that sales of new automobiles and light trucks were largely stable or up slightly during the reporting period, and contacts were optimistic for stable sales or slight growth over the balance of the year. A few reports indicated that inventories for various goods remained near desired levels despite slower sales in some cases, as retailers have been practicing very tight inventory management.\nReports from most Districts pointed to consistent gains in travel and tourist activity, with pickups evident in the business and leisure segments alike. New York reported strong tourist activity that kept hotel occupancy rates high in Manhattan despite an increase in hotel capacity this year, while Boston noted that travel and tourism activity was \"stronger than expected.\" Several other Districts also reported rising visitor counts and hotel occupancies, notably for popular tourist destinations in the Richmond, Minneapolis, and San Francisco Districts, although several pointed to continued softness in per-visitor spending. Atlanta noted reduced tourist activity in areas of the Gulf Coast affected by the oil spill but improvements over last year in unaffected areas. Airline traffic was stable to up, with Boston pointing to an expanded number of low-fare carriers.\nNonfinancial Services\nActivity was largely stable or up slightly for professional and other nonfinancial services. Providers of information technology (IT) services such as computer software saw substantial revenue and sales gains in the Boston and Kansas City Districts, with increased demand for IT labor reported in Chicago as well. Demand for professional services such as accounting held largely steady, with Minneapolis and Dallas noting increases for selected types of consulting and legal services. Conditions were mixed for providers of real estate services, as heightened appraisal activity for refinancing purposes was offset by depressed home sales and consequent limited needs for agents and brokers. Demand for temporary staffing services remained on an upward trend, with increases noted by Boston, Philadelphia, Richmond, and Minneapolis, although Chicago pointed to a slight softening during the reporting period. Reports from the health-care sector were mixed: Boston, Cleveland, and Chicago reported ongoing increases in demand for health-care workers, while Philadelphia indicated a flattening in demand for health-care services and San Francisco noted a decline in the frequency of elective procedures and routine tests. Demand for shipping and transportation services generally expanded, although according to Cleveland the pace of growth slowed and contacts there expect little change from existing volumes in the near term.\nManufacturing\nManufacturing activity expanded further on balance, although the pace of growth appeared to be slower than earlier in the year. Most Districts reported further gains in production activity and sales across a broad spectrum of manufacturing industries. However, New York, Richmond, Atlanta, and Chicago noted that the overall pace of growth slowed, while Philadelphia, Cleveland, and Kansas City reported that demand softened compared with the previous reporting period. Recent weakness was most notable for construction-related products, according to reports from Cleveland, Richmond, Chicago, Dallas, and San Francisco. By contrast, orders and activity edged up for makers of steel and other metals in Cleveland, Chicago, and St. Louis, propelled largely by demand from the transportation equipment industry. Activity among automobile makers and parts suppliers rose further in Richmond and held steady in Chicago, although it dropped temporarily in Cleveland as a result of factory retooling. Manufacturing activity for commercial aircraft was steady in the Dallas and San Francisco Districts, although a contact in Boston reported that the industry's recovery has been slow. In the Boston and San Francisco Districts, makers of semiconductors and other high-tech products saw further sales gains, while Dallas noted that demand held largely steady at existing high levels. Among nondurable products, food processing stepped up in Philadelphia and San Francisco. Demand conditions for paper products were mixed, with increased sales and expansion plans noted in Minneapolis and St. Louis but flat to declining sales identified in Dallas. Export demand was an important contributor to healthy conditions in the manufacturing sector according to Boston and Chicago, notably for heavy machinery and autos.\nReports on capacity utilization were mixed. Manufacturers of high-tech products have been operating near maximum capacity of late, although this partly reflects a substantial decline in industry-wide capacity over the past three years, as noted by Dallas. More generally, the majority of Cleveland's manufacturing contacts reported that capacity utilization remained below pre-recession levels. Capital spending plans for manufacturers and firms in other industries generally indicate little change or modest increases in coming months, based on reports from the Boston, Philadelphia, Cleveland, Chicago, Kansas City, and San Francisco Districts.\nReal Estate and Construction\nActivity in residential real estate markets declined further. Most District reports highlighted evidence of very low or declining home sales, which many attributed to a sustained lull following the expiration of the homebuyer tax credit at the end of June. Some Districts, such as New York and Dallas, noted that the expiration of the tax credit created especially weak conditions for lower-priced homes, while others, including Philadelphia and Kansas City, identified the high end of the market as the primary weak spot. Residential construction activity declined in most areas in response to weak demand. Cleveland, St. Louis, and Minneapolis were the exceptions to this pattern of declining activity, with reports from their contacts indicating that residential construction activity improved of late. Inventories of available homes rose in general, although the availability of new homes in Atlanta was held down by the slow pace of new home construction. Price movements were mixed, with most Districts reporting stability or declines of late; a few, notably Boston, Minneapolis, and San Francisco, noted that prices rose in some areas compared with the previous reporting period or last year. Richmond reported that recent home sales were \"dominated by foreclosure and short sales,\" and Chicago reported an increase in the supply of foreclosed homes for sale.\nDemand for commercial, industrial, and retail space generally remained depressed. Vacancy rates stayed at elevated levels in general and rose further in a few Districts, placing substantial downward pressure on rents. Asking rents continued to decline in parts of the New York and Kansas City Districts. High vacancies and negative absorption held nonresidential construction activity to the bare minimum in most Districts. A few Districts reported exceptions to weak conditions. Cleveland noted improved construction activity for industrial use and educational infrastructure; this raised overall activity above year-earlier levels and prompted modest hiring by builders. Chicago reported an increase in inquiries for commercial redevelopment and rising construction activity for public projects, but Richmond reported that state and local governments cut back on construction projects.\nBanking and Finance\nLending activity was stable to down slightly on net. Most Districts reported little or no change from existing low levels of commercial and industrial lending, as businesses remained quite cautious about expansion plans. Dallas and San Francisco reported that overall lending trailed off, with declines driven by weak business lending stemming in large part from uncertainty about future economic conditions. Consumer lending remained sluggish in general, with contacts in Philadelphia and Richmond emphasizing the role of households' ongoing efforts to reduce their debt burdens. A recent flurry of refinancing activity spurred increased demand for residential mortgages in the New York, Cleveland, Chicago, and Kansas City Districts, but new-purchase mortgage originations remained quite sluggish in general. A few Districts pointed to increases in nonbank financing activity, including rising availability of trade credit in Atlanta and further increases in venture capital funding in San Francisco.\nLending standards were largely unchanged. However, New York reported tighter standards in all lending categories, particularly for commercial mortgages, and Kansas City reported that a few banks tightened standards for commercial real estate loans. By contrast, reports from Chicago indicated that credit availability and terms loosened for business and consumer loans. Credit quality also changed little on balance. Philadelphia, Chicago, and San Francisco noted modest improvements in overall credit quality, while New York reported rising delinquencies for all categories except consumer loans and Atlanta reported an increase in business and household bankruptcies.\nAgriculture and Natural Resources\nDemand for agricultural products continued to expand, and producers benefited from relatively tranquil supply conditions. Crops and livestock generally sold well in Districts with extensive agricultural sectors, including Chicago, Minneapolis, Kansas City, Dallas, and San Francisco. Domestic growers have seen increased demand for grains and other commodities as a result of shortages overseas. Growing conditions were supportive of relatively high yields in most areas, although volatile weather conditions held corn and soybean yields below the record levels expected earlier in the season in the Chicago District. Low moisture during parts of the growing season also undermined yields for selected crops in the Richmond and St. Louis Districts, most notably for corn.\nDemand and extraction activity increased for producers of natural resource products, including oil and other items used for energy output. Rising global demand spurred expanded extraction activity for oil, natural gas, and assorted minerals, as reported by Cleveland, Atlanta, Minneapolis, Kansas City, Dallas, and San Francisco. In the Atlanta District, oil production was barely affected by the Gulf oil spill, although contacts noted lingering concerns about the longer-term business impacts of the deepwater drilling moratorium and higher liability insurance costs for oil extraction companies.\nPrices and Wages\nUpward price pressures were very limited during the reporting period, with the exception of selected food commodities and industrial materials. Philadelphia reported increases in the prices of primary metals and wood products, Minneapolis pointed to higher prices for copper and lead, and Dallas and San Francisco reported higher prices for grain and selected other agricultural commodities. Atlanta reported that commodity and transportation-related prices rose, but their contacts indicated plans to absorb the increases into their margins rather than passing them on to consumers. Chicago, Kansas City, and San Francisco also noted limited pass-through of cost pressures to downstream prices.\nWage pressures remained modest overall. Of Districts commenting on wages, most identified little or no upward pressures or increases. Dallas reported that wage pressures were \"generally nonexistent,\" with the exceptions of some airline and temporary workers. Hiring of permanent employees was held down in part by employers' reliance on temporary and contract workers, as reported by Philadelphia and Atlanta, although Boston noted that conversions from temporary to permanent staff picked up. Contacts in the Boston, Chicago, and Kansas City Districts noted skill mismatches between available jobs and the workers applying for them, which caused a slight uptick in wage pressures for selected jobs in a narrow set of industries. More generally, however, the reports suggested ample supply of qualified applicants for open positions.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Dallas

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"Beige Book Report: Dallas\nSeptember 8, 2010\nThe Eleventh District economy expanded modestly over the past six weeks. The energy sector remained a source of strength, and agriculture, transportation services and staffing firms reported solid growth. Retailers said sales rose, but the pace of growth was slower. Reports from the manufacturing sector were mixed, but overall suggest a slowdown. In particular, construction-related manufacturers said demand was very weak as housing demand has retrenched and private nonresidential activity is almost nonexistent. Most respondents expect economic conditions to remain positive, although many expect slower growth through year-end. Uncertainty was prevalent in most outlooks.\nPrices\nSelling prices held steady at most responding firms. Retailers said prices were flat and airline fares stabilized after increases earlier in the year. Contacts across industries said pricing was extremely competitive. There were, however, scattered reports of price increases in a few industries. Paper producers and aircraft manufacturers said they were able to pass on increased input costs. Additionally, prices for some petrochemical products rose slightly. Some staffing firms were attempting to raise fees due to strong demand. Contacts in the agricultural industry said commodity prices had moved up recently. Cotton prices are up nearly 50 percent over last year and cattle prices have risen strongly.\nCrude oil prices fell below $73 per barrel by late August after a run up to $82 earlier in the month. The price of gasoline, diesel and heating oil fell during the reporting period, as inventories rose due to weak demand. Contacts said natural gas prices edged down to just under $4 per Mcf by late August as the national heat-wave subsided.\nLabor Market\nEmployment levels were stable at most firms, and the overall labor market remained somewhat slack. Some contacts in the lumber and trailer manufacturing industries reported layoffs. On a more positive note, there were scattered reports of hiring activity. Staffing firms cited continued increases in placement activity, and a few contacts in transportation services, legal services, automobile sales, and transportation manufacturing said they had added workers. Wage pressures were generally nonexistent, with exceptions found in the airline industry and for some temporary workers.\nManufacturing\nMost producers of construction-related materials--including brick, lumber, cement, glass and primary and fabricated metals--said conditions remained weak. Several respondents tied to housing construction said orders were especially low in July because of the vacuum created by the end of the tax credit. Contacts that produce products used in nonresidential construction noted most activity was related to public projects. Outlooks were slightly more pessimistic than in the last report, with several contacts expecting no turnaround until 2012. A primary metals producer that sells to transportation manufacturers was more upbeat and expects increased orders in coming months.\nManufacturers of high-tech products said demand held steady over the past six weeks. Growth in orders has leveled off in recent months after a replenishment of inventories earlier in the year that drove very strong growth. Most respondents characterize current order levels as good. Although inventories have increased, respondents said they are relatively lean and in some cases below desired levels. Several semiconductor contacts said that industry-wide capacity has fallen about 30 percent over the past three years and, even with growing capital expenditures, capacity utilization is likely to remain very high for the next two to three years. Outlooks were positive for the remainder of the year.\nPaper manufacturers reported flat to declining sales over the past six weeks. Contacts said customers are very cautious about keeping inventories, due to pessimistic economic outlooks. Growth in demand for food products stalled since the last report. Respondents said they did not see the normal summer boost this year.\nNon-defense aircraft manufacturers said orders held steady over the past six weeks and are above year-ago levels. Outlooks were cautiously optimistic. Trailer producers said demand had fallen as uncertainty about the national economy increased. Sales are expected to be slow through year-end.\nPetrochemical producers were mostly optimistic, noting domestic orders were strong and growing. Export growth was positive but slower, as current prices were less competitive in Europe and Asia. The only reported weakness was for vinyl products used in housing and commercial construction. Refiners noted weaker conditions as seasonal gains in gasoline consumption did not materialize and distillate (diesel and heating oil) consumption slipped back. Contacts expect a decline in capacity utilization rates and refining runs due to weaker margins.\nRetail\nRetailers noted that growth has slowed recently, but sales are up on a year-over-year basis. Customers continue to focus on non-discretionary items while shunning big-ticket purchases. Eleventh District sales trended slightly above the nation over the reporting period, a change from the previous report. Outlooks suggest that while sales growth may be slower for the remainder of the year; overall 2010 sales should show positive single-digit growth.\nAutomobile demand held steady over the reporting period. Contacts said inventories are at appropriate levels and manufacturers are incrementally increasing production. Expectations are for continued modest improvement.\nServices\nMost staffing firms report that demand continues to grow at a solid pace, and is particularly strong for light industrial, sales, administrative, professional and technical workers. Placement activity continues to be mostly for contract work as employers are still hesitant to hire permanent staff. Near-term outlooks are optimistic, but respondents are cautious about the longer term. Accounting firms note that while demand for tax-related services has slowed seasonally and that for real estate and construction-related work remains nonexistent, there has been a pickup in transactional and consulting activity. Demand for legal services was largely unchanged during the reporting period, with the exception of an uptick in corporate demand for mergers and acquisitions-related activity.\nDemand for transportation services remains positive. Railroad respondents noted a broad-based increase in cargo volumes, with shipments of grain products recording the largest increase. Shipping firms said small parcel cargo volumes rose, while large freight shipments declined during the reporting period. Intermodal transportation firms reported a modest increase in shipments. Airline traffic was flat to slightly down since the last report, but is stronger than a year ago. The outlook is for continued stability in air travel demand.\nConstruction and Real Estate\nHome sales continued to slide since the last report. Contacts noted demand was especially weak in the lower-priced segment of the market which had benefitted most from the homebuyer tax credits. Construction of new homes fell as large public builders scaled back. Outlooks are guarded for the rest of the year. Sales and construction are expected to remain weak, as the tax credit affected the timing of purchase decisions.\nContacts in the office and industrial real estate sectors said leasing activity remained subdued. Investor interest in nonresidential properties remains high however, and contacts say sales continue to edge up.\nNonresidential construction remains weak. Contacts reported a notable lack of private nonresidential projects. Public construction is the main source of activity for most contacts, but some expressed concern that such projects would subside due to budget constraints.\nFinancial Services\nFinancial firms said loan demand continued to trail off. Business lending was especially weak, and contacts said businesses lacked confidence and were unwilling to make financial commitments. Deposit growth was strong, and credit quality on outstanding loans was stable. Several respondents reported concerns over financial reform legislation and other political uncertainties. Earnings projections are flat for 2011, and some contacts were building up loan loss reserves in preparation for the coming year.\nEnergy\nDrilling activity in the Eleventh District rose since the last report. The Permian Basin in Texas led the increase, as activity continues to be directed to land-based oil. Drilling service companies noted solid demand and improved margins. Contacts noted that the deep water drilling moratorium will impact revenues, but strong domestic land and international activity is mitigating the impact.\nAgriculture\nHot, dry weather reduced soil moisture in most of the District, but drought conditions are minimal. Respondents said crop conditions remain very strong, and yields for harvested crops are above average. A record cotton crop is expected for Texas this year. Demand for U.S. agricultural products has picked up in the wake of the devastating flood in Pakistan and drought in Russia, and most commodity prices have moved up as a result.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Atlanta

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"Beige Book Report: Atlanta\nSeptember 8, 2010\nSixth District business contacts indicated that the pace of economic activity continued to slow in July and August. Retailers reported a decrease in traffic and sales, and their outlook was less positive than in previous months. Reports from the District's tourism sector were mixed as contacts outside of the oil-spill affected Gulf coast experienced positive growth, but areas from Louisiana to the Florida panhandle saw significant declines in visitors. Residential real estate contacts noted that the pace of new and existing home sales slowed, and their outlook remained pessimistic. Nonresidential real estate activity remained weak. Manufacturers reported that the pace of new orders growth slowed. Banking credit conditions remained constrained and loan demand was reportedly weak. Labor markets improved modestly, but most businesses maintained a strong preference for increasing the hours worked of existing staff and expanding their use of temporary hires rather than for hiring permanent employees. Transportation and material prices rose slightly, but most firms expressed limited ability to pass increases through to consumers.\nConsumer Spending and Tourism\nMost District merchants reported that traffic and sales decreased in July and August. Retailers continued to keep inventory levels low and the outlook was less positive than in previous months. District automobile dealers indicated that sales increased from a year ago.\nThe oil spill had a negative impact on tourism along the affected Gulf Coast. Outside of areas affected by the oil spill, tourism continued to show signs of improvement compared with last year. Hospitality contacts in Miami, Nashville, New Orleans, and Orlando experienced increasing hotel occupancy rates in July and August. In addition, northeast Florida, Georgia, and mountain resorts in Tennessee saw an increase in activity--some reportedly as a result of deflected business from the oil affected areas. The cruise-line industry cited a pickup in traffic and a modest increase in prices.\nReal Estate and Construction\nResidential real estate reports showed that home sales weakened further in July and August compared with a year ago. Realtors noted that existing home sales fell slightly, while homebuilders said that new home sales fell further below the year-earlier level. New home construction softened further from already low levels. Realtors indicated that home listing inventories continued to rise, but homebuilders conveyed that new home inventories declined compared with a year earlier as a result of very weak new home construction. Home prices weakened somewhat in July and August and contacts noted mounting downward pressure on prices across the District. Contacts' outlook for both new and existing home sales growth over the next several months was pessimistic.\nNonresidential construction activity remained weak. Contractors noted that the pace of commercial development was below the year-earlier level and backlogs remained low. Vacancy rates were high across the District and contacts continued to witness downward pressures on rents. Contractors' outlook for the rest of the year remained negative.\nManufacturing and Transportation\nManufacturing contacts reported that overall activity was expanding, but at a slower pace than in the previous report. Fewer District manufacturers noted increases in new orders, and more said that orders were lower. District trucking companies reported improved revenues and a moderate pickup in freight volumes through August compared with a year ago. However, railway companies described slower growth in motor vehicles, chemicals, and housing-related shipments.\nBanking and Finance\nUncertainty and conservative lending continued to hamper loan activity across the District. Businesses cited difficulties receiving credit and many firms expressed little or no interest in applying for new loans because of low expectations for future sales or orders. Businesses also reported refusing offers of credit because of unfavorable terms from banks. However, multiple contacts indicated an expansion of trade credit to create and extend lines of credit outside of the traditional banking infrastructure. Personal and business bankruptcies increased across the District.\nEmployment and Prices\nPrivate payroll employment improved slightly in July, although many businesses continued to note a strong preference for increasing existing staff hours and using part-time or temporary staff rather than hiring full-time employees. Contacts also reported that the pool and the qualifications of applicants have increased significantly. While the long-term impact of the oil spill on labor markets is still unknown, businesses along the Gulf coast noted that, so far, job losses have been largely offset by hiring in clean-up and mitigation efforts.\nDistrict contacts reported increases in commodity and transportation-related prices compared with a year ago. Most firms conveyed no plans to pass the increases on to consumers, opting instead to continue to internalize cost pressures through a combination of lower margins and increased efficiencies.\nNatural Resources and Agriculture\nLocal oil production increased slightly and Gulf of Mexico crude inventories stayed near the top of their average range for this time of year. Contacts indicated that the impact on production from the oil spill were nominal. However, concern remains regarding the potential longer-term impact of the deepwater drilling moratorium on the Gulf's energy production and the business impact of increased liability insurance costs for independent oil companies.\nLimited rainfall, coupled with hot temperatures, challenged crops and livestock in most District areas. Short topsoil moisture levels were widely reported across the District. In addition, dry weather conditions have pushed some growers to an early harvest season.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Chicago

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"Beige Book Report: Chicago\nSeptember 8, 2010\nThe pace of economic activity in the Seventh District moderated in July and August. Nonetheless, contacts remained cautiously optimistic that it would strengthen again as we near the end of the year. Manufacturing production growth slowed and private construction decreased, while consumer spending increased and business spending continued at a steady pace. Credit conditions improved slightly. Price and wage pressures were limited, while agricultural prices moved higher.\nConsumer Spending\nConsumer spending increased from the previous reporting period. Retail sales excluding autos were up in August influenced by state sales tax holidays and heavy discounting on back-to-school items like clothing. Contacts noted that higher and lower-end retailers fared well, with middle-end retailers continuing to see customers trading down to lower priced alternatives. Auto sales rose in July as increased incentives spurred demand, but sales leveled off in August. Dealers continued to report that inventories were lower than desired, particularly for the most popular Ford, GM, and Chrysler models. In addition, warmer weather in late summer boosted travel and tourism activity in the District.\nBusiness Spending\nBusiness spending continued at a steady pace in July and August. Inventory rebuilding was less widespread than earlier in the year, but was ongoing in several industries. Capital spending plans were largely unchanged, although merger and acquisition activity was reported to have picked up in manufacturing. The pace of hiring moderated, but manufacturing, information technology, and healthcare were exceptions to this trend. Contacts indicated that firms were increasingly engaging in replacement hiring for entry-level positions as they promote from within to address mid-level turnover. Demand for temporary and contract labor, while a bit weaker than during the previous reporting period, remained strong. Several contacts also noted a mismatch between the skills of the large number of unemployed workers and the types of available jobs.\nConstruction and Real Estate\nConstruction activity decreased from the previous reporting period. Residential building remained minimal despite the fact that unsold inventory has fallen considerably in recent months. Both new and existing home sales declined, with foreclosed homes coming onto the market at a heightened pace. A contact noted that downward pressure on new home prices had likely bottomed out due to the fact that builders were refraining from reducing prices below costs, as many had done earlier in the year. Refinancing activity picked up as mortgage rates moved lower, but contacts continued to report that new mortgage credit remained tight for many borrowers. Private nonresidential construction was again constrained by elevated vacancies and declining commercial rents. Contacts also noted, however, an increase in inquiries and redevelopment projects of vacant commercial space. In contrast, public construction increased with activity concentrated in transportation infrastructure and healthcare-related projects.\nManufacturing\nManufacturing production growth slowed from the previous reporting period. Contacts indicated it was difficult to gauge the extent of the recent softening as July and August, in general, tend to be slower. In a positive sign, several metals manufacturers indicated that orders and inquiries had begun to firm in recent weeks. Manufacturers of construction materials and household goods reported declines in shipments, with the exception of household appliances where inventory continued to be rebuilt in the aftermath of the recent rebate programs. The transportation industry remained a source of growth with auto and heavy truck production holding steady. Demand for heavy equipment increased considerably as rental companies rebuild inventories following greater than expected demand this past spring. Export activity was also robust, with heavy machinery and autos leading the way. Demand from developing economies in Asia and South America continued to be strong, but contacts also noted that demand from Europe had improved considerably in recent months.\nBanking and Finance\nCredit conditions improved slightly from the previous reporting period. Corporate credit spreads edged lower and business loan demand was steady, driven mostly by refinancing and acquisition activity. On the other hand, demand for liquidity remained high with greater uncertainty over the economic outlook, regulation, and the political landscape restraining the supply of credit. Contacts indicated, however, that demand for distressed commercial properties continued to be strong. Banking contacts again noted that fierce competition was leading to greater flexibility in pricing and terms and greater availability of business loans. Consumer loan availability also increased, particularly for auto loans and credit cards. Bank loan quality continued to slowly improve, and lower loan loss provisions contributed to higher bank earnings.\nPrices and Costs\nPrice and wage pressures continued to be small in July and August. Pricing power and pass-through of cost pressures to downstream prices were limited. Commodity prices firmed, but only a few contacts reported significant increases in material costs. Similar to the previous reporting period, wage pressures increased only modestly. However, several contacts expressed concern over the prospect of rising healthcare costs in the coming year.\nAgriculture\nCrop conditions were better than a year ago in much of the District. Corn and soybean crops continued to develop ahead of last year's pace, setting the stage for an early autumn harvest. However, alternating periods of excess precipitation and intense heat sapped the potential for record yields in many areas, and the incidence of diseased soybeans increased in Iowa. Preliminary yield reports were lower than anticipated, but the harvest was still expected to be a \"good\" one. A rally in corn and soybean prices during the reporting period prompted additional selling ahead of crop deliveries. Stocks were adequate to meet demand, but some poor quality corn required blending before it could be sold. Revenues in the livestock sector improved as dairy, hog, and cattle prices increased. In addition, a major recall of eggs produced in Iowa lowered supplies.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

New York

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"Beige Book Report: New York\nSeptember 8, 2010\nOn balance, the Second District's economy showed signs of decelerating since the last report. Input prices have continued to rise moderately, while consumer prices appear to be steady to down slightly. General merchandise retailers report that sales have slowed since the last report, though auto dealers categorize sales as fairly good. Commercial real estate markets have generally been steady to softer since the last report. Residential real estate sales markets weakened to very low levels, though New York City's rental market continued to improve modestly. Manufacturing-sector contacts report some further deceleration in business activity. Tourism activity in New York City has been steady at a strong level since the last report, buoyed by rising business travel. Overall, the labor market, though still slack, has shown further modest signs of improvement. Finally, bankers report steady to weaker loan demand, steady to higher delinquency rates and some tightening in credit standards, but also some narrowing in loan spreads.\nConsumer Spending\nNon-auto retailers report that sales have slowed across the District since the last report, with comparable-store sales running just 2-3 percent ahead of a year earlier, on average, in July and up just 1-2 percent in the first few weeks of August. The slowing has been particularly pronounced at New York City stores. Two major shopping malls in western New York State also report that sales weakened in July through early August, and they report substantial discounting--especially at clothing retailers. Despite this recent slowing, most contacts continue to report that inventories generally remain at favorable levels. Contacts report steady to modestly declining selling prices and acquisition costs. One contact notes that steep discounting has been necessary to move merchandise.\nAuto dealers in the Rochester area report that sales of new autos were down roughly 10 percent from a year ago in July and down 15 to 20 percent in the first half of August, while Buffalo-area dealers report a 5 percent year-over-year increase in July and project a moderate decline in August. Still, contacts in both areas describe the current sales pace as fairly good, with the 12-month comparisons depressed by last summer's \"Cash for clunkers\" program. Dealers report that both retail and floor-plan credit conditions have continued to improve.\nTourism activity in New York City has been steady at a strong level since the last report. Manhattan hotels report that occupancy rates remained close to 90 percent in July and August, even as the number of hotel rooms has risen by more than 5 percent over the past year. Moreover, room rates continued to run 10-15 percent ahead of this time last year. Business travel has reportedly increased in recent months, accounting for a growing share of revenues. Broadway theaters report that attendance picked up a bit in the latter part of July and remained brisk in August--up roughly 5 percent from a year earlier, though the average ticket price was down 4 percent in August from comparable 2009 levels. Overall revenues were up moderately from a year earlier in July but flat in the first three weeks of August.\nConstruction and Real Estate\nHousing markets have shown further signs of softening since the last report, with much of the weakness again attributed to the expiration of the home-buyer tax credit. Buffalo-area Realtors say the market has cooled dramatically and describe home sales activity as \"totally dead\" in July and early August; historically low mortgage rates are said to be having little if any positive effect. They also report that pending sales activity has fallen sharply and that the number of active listings has increased. One contact in western New York State anticipates consolidation in the real estate industry, as some agents and brokers are likely to merge or exit the market. Across New York State more broadly, the number of sales transactions fell by roughly half from June to July--a far steeper drop than the seasonal norm--and was down 35 percent from a year earlier. The median reported sales price rose in July and was up from a year earlier, though one industry contact notes that this may reflect a shift in the mix, as the expiration of the tax credit predominantly affected the lower end of the market. An authority on New Jersey's housing industry reports that market conditions appear to be weak but concedes that underlying fundamentals are difficult to gauge during this perennially slow season. With builders holding off on new construction, inventories have gotten quite low, though prices still seem to be drifting lower. Most of the multi-family development along New Jersey's \"Gold Coast\" (across from Manhattan) has now shifted to rentals.\nIn New York City, conditions were more mixed. Activity in the city's co-op and condo market has fallen off by somewhat more than the seasonal norm in July and August, following a brisk second quarter; activity has dropped off particularly sharply on Long Island and, in general, at the lower end of the market. A leading appraisal firm reports that prices remain essentially flat in Manhattan and across New York City generally. The appraisal business has reportedly remained strong. Manhattan's rental market, though still somewhat slack, has continued to recover: rental activity has remained stable at a moderate level, while effective rents have rebounded--contract rents have risen only modestly, but landlords are offer fewer concessions (i.e. fewer months free rent). A considerable volume of new development will be coming onto the market, probably largely as rentals, in the months ahead.\nOffice markets across the District were generally steady to weaker since the last report. Vacancy rates were steady throughout most of the District, though they increased modestly in Manhattan and the Albany area. Asking rents were also little changed overall; they edged up in the Long Island and Syracuse areas but edged down in the northern New Jersey and Albany markets. Asking rents are still down sharply from a year ago in Manhattan and down moderately in Long Island and northern New Jersey; however, rents are up from a year ago in the Buffalo, Syracuse and Albany areas. Industrial markets were also steady to weaker across the District since the last report. Industrial vacancy rates rose modestly across the New York City metro area and held steady in the Buffalo and Rochester areas. Asking rents were generally down 3-4 percent from a year ago.\nOther Business Activity\nManufacturing firms in the District report some leveling off in conditions in July and August, after reporting fairly widespread improvement during the first half of the year. However, a sizable number of manufacturing contacts indicate that they are increasing employment. Non-manufacturing firms report ongoing improvement in general business conditions and continue to report moderate increases in employment; they remain fairly optimistic about the near term outlook. Both manufacturers and other firms report ongoing increases in prices paid but only modest changes in selling prices. Separately, a trade association survey of New York State firms, conducted in July, indicates fairly widespread optimism about revenue growth and notes that far more respondents plan to increase than decrease head-counts in the next year.\nA major NYC employment agency, specializing in office jobs, reports that, while the job market is difficult to gauge during the slow summer season, market conditions appear to be improving gradually and conditions are not as dire as last summer. The pool of available candidates is not as large as it was last summer; however, some people who had given up looking are starting to come back.\nFinancial Developments\nContacts at small to medium sized banks in the District report decreased demand for consumer loans and commercial mortgages, and steady demand for commercial and industrial loans. Demand for residential mortgages picked up, but this may largely reflect refinancing of existing loans (which rose sharply). Respondents indicate a tightening of credit standards for all categories--particularly in the commercial mortgage category. For the first time in well over a year, bankers report a decrease in spreads of loan rates over costs of funds--primarily for residential mortgages. Bankers report little or no change in spreads for other loan categories. Finally, bankers' responses point to increased delinquency rates for residential mortgages, commercial mortgages and commercial and industrial loans but little change in delinquencies for consumer loans.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Boston

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"Beige Book Report: Boston\nSeptember 8, 2010\nRecent business developments are positive on average across the First District, but performance continues to vary between and within sectors. Reports are mostly upbeat among contacts in software and IT. Manufacturing firms also had mostly positive news, with recent sales at least steady for most and very strong in some cases. Among staffing services, positive developments outnumber negative ones. Retailers give mixed results, including some significant sales declines. In the commercial real estate market, leasing activity is flat to modest and downward pressure on rents remains high in Boston. Residential real estate sales are very weak following the expiration of the home-buyer tax credit but selling prices are up slightly in many parts of the region. Concerning the labor market, some firms are hiring modestly or plan to hire soon, while others are still reluctant to hire. The number of job-seekers is perceived as high by some, while others are having difficulty filling vacancies requiring specific skills. Some software and IT firms are giving significant pay raises and staffing firms also note an increased willingness to pay higher wages among some firms. Constraints in ocean-freight capacity are a concern among manufacturers and retailers, as are increases in commodity prices. The outlook varies widely across sectors, from largely positive in manufacturing and software to cautious in retail and tourism and mixed among commercial real estate professionals.\nRetail and Tourism\nFirst District retailers report mixed sales results for July and early August. Year-over-year same-store sales range from decreases of 10 percent to increases in the low single-digits, and one contact quips that \"flat is the new up.\" Back-to-school sales were modest, with the consumer focused on buying for immediate needs only. Several retailers report increases in foot traffic but also smaller average ticket size. Inventory levels are generally in line with expectations. However, decreased ocean-freight capacity has firms concerned about their ability to restock in a cost-effective and timely manner, forcing additional advanced planning. Capital spending is mixed and headcount is stable. Retailers note significant cost increases for food commodities, particularly dairy. Outlooks are cautious or cautiously optimistic.\nTravel and tourism are stronger than expected. One contact attributes the trend to generous travel incentives, supported by an increase in the number of low-fare air carriers operating out of Boston. Overseas arrivals are much stronger than forecast. Business travel is also more robust than anticipated, with travel managers using the downturn to leverage favorable rates. The respondent reports modest hiring in the visitor industry, although the outlook remains cautious.\nManufacturing and Related Services\nNearly all manufacturing firms surveyed report favorable results for the second quarter. Demand is particularly strong at semiconductor and pharmaceutical firms. One respondent from a long-standing business describes the second quarter as their best ever. In contrast, a parts supplier for the aircraft industry says that demand has been slow to recover from the recession. Sales held steady in recent weeks among many contacted manufacturers; multiple respondents attribute recent demand to booming business in northern and western Europe. The same firms describe domestic sales as flat in comparison. In addition, several diversified manufacturers and one large domestic industrial manufacturer all note that sales leveled off in recent weeks relative to the first half of the year.\nInventory levels at many contacted firms are reportedly low in comparison with pre-recession levels. One firm remarks that, even if demand were to slow, it would not be as damaging as in 2008 because most goods are being produced only as orders arrive. Low inventory levels are also attributed to supply constraints. A number of firms report that suppliers are producing at capacity due to cuts in capacity in 2008 and 2009. In addition, inputs for one firm have been slow to arrive because of cutbacks in global ocean-freight capacity. These constraints have led at least one contact to stockpile intermediate inputs as a hedge. Despite supply constraints, almost all respondents report that selling prices remain relatively steady, although some note continued fluctuations in raw materials prices. Some firms passed modest price increases on to their customers.\nHiring remains limited among the manufacturing firms surveyed. The companies that cut workforces substantially during the recession are slowly re-hiring workers, although employment at most of these firms remains below 2008 levels. Some firms expect hiring to pick up next year, although one firm wants to see sustained growth before making major hiring plans. A few semiconductor and pharmaceutical firms continue to have difficulties filling skilled positions. Capital spending plans at most manufacturers remain moderate, as some firm's upgraded IT infrastructure and other equipment. A number of firms characterize the investment environment as favorable but had not yet found good opportunities.\nMany firms remain optimistic about growth going forward. One contact notes that demand is much stronger than what news reports suggest. By contrast, a few firms are not as optimistic as they were three months ago. Firms again mention being concerned about the uncertainty of fiscal policy going forward.\nSoftware and Information Technology Services\nSoftware and information technology contacts in the First District report that business conditions continued to improve. Year-over-year revenue increases ranged from mid-single digits to 15 percent in the most recent quarter. Half of contacted firms increased their headcounts and another was \"on the cusp of hiring.\" One contact, however, reports a modest reduction in headcount due to restructuring. Wages are steady or up notably, with some merit increases in the range of 3 to 5 percent. Prices held steady and one contact observes less discounting pressure relative to a year ago. Half of contacted firms say that they have increased capital and technology spending relative to last year in order to expand or upgrade equipment; remaining contacts held capital and technology expenditures steady. The outlook among contacts is moderately positive. Most expect a continuation or slight acceleration of current growth rates.\nStaffing Services\nThe majority of First District staffing contacts report that business continues to strengthen, although a few experienced stagnant or inconsistent activity over the past three months. Most contacts describe business since the end of Q2 as \"fair to good\" or \"generally positive,\" with revenue growth in the single digits. Year-over-year revenue changes vary widely, from down slightly to up by over 40 percent. Labor demand increased, particularly in the light industrial, information technology, and health care sectors; however, the consensus among contacts is that jobs are hard to fill. A few contacts report that the supply of job seekers is plentiful but that clients are reluctant to hire; others said that recruiting workers with specific skills has become more difficult. Bill rates and pay rates are steady or up slightly, as many clients show increased willingness to pay higher rates for quality workers. The number of conversions from temporary to permanent staff increased and permanent placements picked up. Several contacts express concern over rising costs, particularly workers' compensation, health insurance, and state unemployment insurance taxes. Despite these concerns, contacts predict continued growth in the coming quarter.\nCommercial Real Estate\nContacts in Hartford, Boston, and Portland describe commercial leasing activity as flat in recent weeks, while a Providence contact describes activity as healthy, notwithstanding some seasonal slowing in recent weeks. Lease renewals and relocations resulted in net negative absorption across the region as businesses continue to consolidate operations. Investors continue to bid aggressively for low-risk properties, while demanding steep discounts on distressed assets. Contacts in Hartford and Portland both are increasingly pessimistic concerning the outlook based on weak forecasts for job growth, while a Providence contact sees potential for significant positive absorption in the downtown office market based on deals currently under discussion. Also on the bright side, loans are flowing to new condominium conversions in core Boston neighborhoods based on increasing buyer demand.\nResidential Real Estate\nNew England contacts report large year-over-year declines in home sales. In July, the greater Boston area reportedly had the fewest sales in over a decade while other parts of the region also experienced very weak sales. Nonetheless, contacts observe relative calm among realtors regarding weak sales activity. They understand that the home-buyer tax credit moved sales forward in time, leaving fewer buyers in the market following the expiration of the incentive. Some contacts are optimistic that a recovering economy and low interest rates on mortgages, particularly for buyers with good credit, will draw buyers into the market in the near future.\nThe number of homes and condos on the market increased around the District. A couple of respondents in Massachusetts expect the increased inventory, and resulting greater choice, to lure more buyers to the market; conversely, a New Hampshire contact is concerned about the excess supply of homes. The median price of homes and condos moved up in most parts in New England. Such moves are attributed to a greater fraction of sales coming from higher-end properties rather than to a general increase in prices. The only exception to this trend is New Hampshire, where prices fell 1 percent year-over-year. Contacts expect prices to remain stable in the coming months, although they anticipate slower sales for the rest of year due to the expiration of the tax credit and perceived lack of job security.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Cleveland

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"Beige Book Report: Cleveland\nSeptember 8, 2010\nOn balance, economic activity in the Fourth District showed a slight improvement during the past six weeks. Manufacturers reported that new orders and production levels were stable or marginally lower. An uptick was seen in residential and nonresidential construction, while retailers and auto dealers experienced a small rise in sales. Reports from energy producers and freight haulers were generally favorable. Demand by businesses and consumers for new loans remained weak.\nThe pace of new hiring has diminished, with only scattered reports of increased payrolls from manufacturers, nonresidential builders, and auto dealers. Overall, staffing-firm representatives noted little change in the number of new job openings, with available openings concentrated in healthcare and the skilled trades. Wage pressures continue to be contained. Apart from a rise in steel and agricultural commodity prices, raw materials and product pricing were generally stable.\nManufacturing\nReports from District factories show that production levels were mainly steady or down slightly during the past six weeks. Changes in new orders mirrored those in output. Production was higher on a year-over-year basis, with several contacts citing double-digit increases. A large majority of respondents expect output will stay at current levels for the near term. Those anticipating a drop in production attributed it primarily to seasonal factors or the continuing slump in residential construction. Most steel producers and service centers reported that volume was stable or increasing. Shipments are being driven by energy-related, auto, and heavy equipment industries. Construction volume remains weak. Although underlying uncertainty exists, more than half of our steel contacts expect that the current level of business activity is sustainable in the near term. District auto production showed a large drop in July on a month-over-month basis, due to retooling for model changeovers. In terms of year-over-year comparisons, production rose substantially for both domestic and foreign nameplates.\nOnly minor shifts in inventories were noted, mostly on the up side. A majority of our contacts stated that utilization rates remain below pre-recession levels, with little change during the past few weeks. Capital outlays continue at relatively low levels, with any significant increases due to investment projects that had been previously delayed. Steel producers and service center representatives reported that raw material prices are rising, although most indicated that their product pricing remains reasonably stable. A few have announced price increases that will go into effect as early as September. Other than a sharp rise in agricultural commodity prices, raw material costs have been fairly steady. We heard only scattered reports of companies hiring new workers, although several firms have extended work hours. Wage pressures are contained.\nReal Estate\nAn uptick was seen in new home construction during the past six weeks and it is on par with year-ago levels. Homebuilders expect construction to remain sluggish going into 2011. Tight credit markets continue to hamper contractors from purchasing land or constructing spec houses. Our contacts tell us that the move-up price-point category is outperforming the entry-level and third-time home-buyer categories. New home prices have shown little movement since our last report and on a year-over-year basis. Other than reductions in lumber prices, construction material costs held steady. General contractors and subcontractors continue to work with very lean crews.\nReports by nonresidential builders indicate some improvement in construction activity since our last report. When comparing to year-ago levels, activity is as good or better according to almost all of our contacts. Backlogs are reasonably healthy, though two builders noted that their backlogs are being depleted at a rapid pace. Inquiries and new projects generally fall within the industrial and education categories. Most of our contacts expect little change in business conditions during the next 6 to 12 months, citing some weakness in inquiries and uncertainty about economic growth. Reports of a small increase in construction material costs, especially for steel, were widespread, and the availability of project financing has improved slightly. General contractors cited an uptick in payrolls. Subcontractors remain underutilized and are taking on projects at cost.\nConsumer Spending\nFor the period from mid-July through mid-August, retail sales generally showed some improvement when compared to the previous 30-day period. Purchases rose slightly on a year-over-year basis. Still, consumers remain cautious in their purchases and are focusing on value-priced seasonal items. Going into the fourth quarter, retailers expect conservative sales growth. Two of our contacts noted modest price increases by their suppliers, which they have passed through to consumers. Margins are up slightly for most of our contacts. Other than replacement workers, retailers plan no additional hiring until the holiday season.\nAuto dealers saw new vehicle sales strengthen from mid-July through mid-August, when compared with the previous 30 days. Reports also showed improving sales on a year-over-year basis. Expectations call for vehicle purchases to stabilize at current levels in the upcoming months. Many dealers continue to say that their inventories are at low levels. Used vehicle purchases are beginning to soften. Interest rates for auto loans are competitive, although arranging financing for customers with less than high credit ratings remains a challenge. Several auto dealers noted that they are undertaking facility upgrades to comply with OEM demands, and they are doing incremental hiring to meet customer demand.\nBanking\nThe market for business lending remains soft, with bankers generally characterizing the demand for new commercial and industrial loans as steady or slowly improving. Commercial real estate lending is particularly weak. Interest rates moved by only a few basis points. On the consumer side, conventional loan demand is weak. Those seeing an uptick attributed it mainly to consumers looking for home equity loans and competitive pricing. Most of our contacts said that the demand for residential mortgage refinancing is very strong, while new-purchase mortgage originations continue at a slow pace. Core deposits held steady or increased at almost all banks, with much of the growth occurring in transaction accounts. Reports on credit quality were mixed, while delinquency rates declined somewhat. Employment rolls and wages showed little change.\nEnergy\nReports indicate steady to moderate increases in oil and natural gas output during the past six weeks, with output expected to remain at current levels in the near term. A big push is on to lease large tracts of farmland in eastern Ohio counties for the Marcellus Shale play. Farmers are being offered well-above average market rates for drilling rights. Spot prices for oil and natural gas are flat or down slightly. Coal production has been stable since our last report, with little change expected. Although summer cooling demand grew significantly from year-ago levels, resulting in stockpiles being drawn-down to normal levels, utilities have not increased their coal purchases. Metallurgical coal shipments to Brazil and Asia were characterized as very strong. Prices for coal were mixed but are tending to the up side. Credit availability is affecting capital spending: A coal producer canceled a machinery purchase because he could not obtain financing, while an energy company is expanding drilling operations due to a successful refinancing. Staffing levels are steady, and little hiring is expected in the near future.\nTransportation\nFreight transport executives reported continuing favorable volume trends, though the rate of growth seen in the past few months is slowing. Expectations call for current volume to be sustained in the near term. Two executives noted that they have been able to successfully negotiate rate increases, resulting in some improvement to their bottom lines. Several of our contacts reported that quoted prices for tractors and trailers have risen substantially, due mainly to complying with new environmental standards. However, these price increases may push back time tables for purchasing replacement equipment until sometime in 2011. Otherwise, only modest price increases were noted for materials and services used by freight haulers. Current hiring is for replacement only, not adding capacity.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

St Louis

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"Beige Book Report: St Louis\nSeptember 8, 2010\nThe economy of the Eighth District has grown modestly since our previous report. Economic activity in the manufacturing sector increased, on balance, as did activity in the services sector. While retail sales reports were mixed, auto sales in July and early August increased over a year ago. Residential real estate markets held steady and commercial real estate activity remained slow. Overall lending activity at a sample of large District banks was largely unchanged during the three-month period ending in July.\nConsumer Spending\nRetail sales reports from contacts in July and early August were mixed. Compared with a year ago, about 37 percent of the retailers saw increases in sales, while 42 percent saw decreases and 21 percent saw no changes. About 32 percent of the respondents noted that sales levels met their expectations, 47 percent reported that sales were below expectations, and 21 percent reported that sales were above expectations. Higher-priced items continued to be weak sellers. One third of the contacts noted that their inventories were too high, while 16 percent reported that their inventories were too low. The sales outlook among the retailers for September and October was mostly optimistic. About 56 percent of the retailers expect sales to increase over 2009 levels, while 20 percent expect sales to decrease and 24 percent expect sales to be similar to last year.\nCar dealers in the District reported that, compared with last year, sales in July and early August were up, on average. About 44 percent of the car dealers surveyed saw increases in sales, while 32 percent saw decreases and 24 percent saw no changes. Just under half of the car dealers noted that used car sales had increased relative to new car sales, while 12 percent reported the opposite. Also, 20 percent reported more acceptances of finance applications, but 12 percent reported more rejections. A slight majority of the car dealers surveyed reported that their inventories were too low, while 12 percent reported that their inventories were too high. The sales outlook among the car dealers for September and October was generally optimistic. About 56 percent of the car dealers expect sales to increase over 2009 levels, but 16 percent expect sales to decrease. The remaining 28 percent expect sales to be similar to last year.\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 and reduce operations. Firms in the soap and cleaning compound, aerospace products and parts, glass products, motor vehicle parts, and primary metal manufacturing industries reported plans to open new facilities in the District and hire employees. Contacts in the food, engine, adhesive, and sanitary paper products manufacturing industries reported plans to expand existing facilities and operations. In contrast, firms in the furniture, hand tool, and power transmission equipment manufacturing industries announced plans to decrease operations and lay off workers.\nThe District's services sector also has continued to improve since our previous report. Firms in the transportation, business support, telecommunications, and government services industries expanded existing operations and hired new employees. Additionally, firms in the restaurant industry opened several new facilities. In contrast, contacts in the business support services and janitorial services industries reported plans to decrease operations and lay off workers.\nReal Estate and Construction\nHome sales varied across the Eighth District. Compared with the same period in 2009, July 2010 year-to-date home sales were down 1 percent in St. Louis and 1 percent in Memphis. However, over the same period, sales increased 19 percent in Louisville and 5 percent in Little Rock. Residential construction continued to improve in most of the District. July 2010 year-to-date single-family housing permits were up in the majority of the District metro areas compared with the same period in 2009. Permits increased 17 percent in Little Rock, 18 percent in St. Louis, and 23 percent in Memphis. Permits, however, remained the same in Louisville.\nDemand conditions in commercial and industrial real estate markets were mixed, while activity in the sector remained weak. Compared with the first quarter of 2010, second-quarter 2010 industrial vacancy rates decreased in St. Louis but increased in Little Rock and Memphis; vacancy rates remained stable in Louisville over the same period. The downtown office vacancy rate decreased in Little Rock, Louisville, and Memphis but increased in St. Louis. During the same period, suburban office vacancy rates decreased in Little Rock and Memphis but increased in Louisville and St. Louis. A contact in south central Kentucky reported that commercial construction is steady but there are concerns that the pipeline for new projects is lean. A commercial constructing contact in northeast Arkansas reported that projects are few and for the most part small, with some activity in education-related projects. A contact in St. Louis reported that construction of office and warehouse spaces has been limited. In contrast, contacts in the northeast Mississippi region have reported significant industrial construction plans.\nBanking and Finance\nA survey of senior loan officers at a sample of large District banks indicates little change in overall lending activity for the three-month period ending in July. Credit standards for commercial and industrial loans remained basically unchanged, while demand for these loans was about the same. Credit standards for commercial real estate loans were also basically unchanged, while demand for these loans varied slightly, ranging from moderately weaker to moderately stronger. Meanwhile, credit standards for consumer loans were basically unchanged, while demand for these loans was mixed, ranging from weaker to moderately stronger. Credit standards for residential mortgage loans remained basically unchanged, while demand for these loans was moderately weaker.\nAgriculture and Natural Resources\nGenerally, development of the District's major crops remained ahead of its 5-year average pace. The overall condition of corn, soybeans, rice, cotton, and sorghum has deteriorated slightly since our previous report: As of August 1, yields for most of the major crops in each District state were expected to be at least 94 percent of last year's yields, although yields for corn and soybeans in both Kentucky and Tennessee and winter wheat in Indiana were expected to be 10 to 20 percent lower than last year. Since our previous report, soil moisture ratings and pasture conditions have deteriorated in most District states.\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 28, 2010\nEconomic activity has moved up slightly in the Third District since the last Beige Book, overall, although several sectors of the regional economy remained soft. Manufacturers, on balance, reported an increase in shipments but a slight decline in new orders in July. Retailers posted year-over-year increases in sales of general merchandise for the month, but motor vehicle dealers indicated that sales have decreased since the spring. Third District banks reported steady loan volume outstanding. Residential real estate agents and home builders said that home sales decreased sharply with the expiration in April of the federal tax credit for purchases and that sales have continued to be soft since then. Contacts in the commercial real estate sector said vacancy rates have been nearly level, but rents have been flat to down. Construction contacts continued to report low levels of activity. Service-sector companies generally reported just slight gains in activity. Business firms in the region indicated that prices of most goods and services have been steady, although there were increased reports of rising prices for some metals and construction-related products. Firms also reported increases in costs for employee health insurance.\nThe outlook among Third District business contacts is guardedly positive, but the level of optimism has waned somewhat since the last Beige Book. Manufacturers forecast a rise in shipments and orders during the next six months, although the balance of positive over negative views has declined since the previous report. Retailers expect sales to expand slightly but believe consumer confidence remains fragile. Auto dealers expect the sales rate to be steady in the months ahead, retreating from their previous view that sales would increase. Bankers expect slow growth in lending. Contacts in both residential and commercial real estate expect mostly flat activity during the rest of the year. Service-sector companies expect slow and uneven improvement.\nManufacturing\nThird District manufacturers reported a modest increase in shipments but a slight decline in new orders from June to July, on balance. Order backlogs also fell, overall. Among the major manufacturing industries in the region, producers of wood products, chemicals, and basic materials reported increases in orders; but orders were unchanged or declined in a majority of manufacturing sectors. In general, manufacturers continued to describe the increase in demand for their products as slow and uneven. One manufacturer said, \"It has been very choppy. We seem to be getting some traction, then orders dry up.\"\nThird District manufacturers expect business conditions to improve during the next six months, on balance, although the margin of positive opinions over negative opinions has declined since the previous Beige Book. Among the firms surveyed in July, about 40 percent expect increases in new orders and shipments, and 20 percent expect decreases. Capital spending plans among area manufacturers remain positive, on balance, but are not strong overall. About one-third of the firms polled in July plan to increase expenditures for new plant and equipment, but nearly one-half plan to maintain level spending, and nearly one-fourth expect to reduce spending.\nRetail\nThird District retailers reported that sales in June increased slightly compared with June of last year and that year-over-year growth continued at around the same modest pace in July. Most retailers said warm weather boosted sales of summer apparel, and some noted increases in sales of jewelry, but many reported that sales of home goods, especially big-ticket appliances, remained weak. Store executives continued to caution that much of the year-over-year improvement in sales was a consequence of last year's poor results and that this easy comparison will also affect the upcoming back-to-school and year-end holiday period. Most retail contacts agreed with the evaluation of a store official who said, \"The consumer is still cautious and looking for value.\"\nThird District auto dealers reported a drop in sales from May to June, with continued slowness in July. Although dealers said there continue to be shortages of popular models, they said overall demand for cars and light trucks has not been as strong recently as it was earlier in the year. Dealers have trimmed expectations since the last Beige Book; they now anticipate little change in the sales rate during the rest of the year.\nFinance\nTotal outstanding loan volume at most of the Third District banks contacted for this report has been flat since the last Beige Book, and commercial bank lending officers said there has been little change in loan balances in any credit category. Some bankers reported that demand for business loans has increased, but demand for residential real estate and consumer credit has eased. Commercial bank officers indicated that credit quality has continued to improve slightly, but delinquencies and defaults remain above historical norms.\nLooking ahead, Third District bankers expect slow loan growth, at best. They generally expect slight gains in business lending but continued softness in consumer and residential mortgage lending. Bank lending officers said credit standards remain more restrictive than they had been in the past few years. For business borrowers, one banker said this means a firm \"must have stable relationships with customers and vendors and show reasonable expectations about cash flow\" to be considered for new or renewed credit facilities.\nReal Estate and Construction\nContacts in residential real estate markets reported sharp decreases in sales of new and existing homes after the expiration of the federal income tax credit for home purchases in April. The sales pace continued to be slow in July, according to real estate agents and builders. Residential real estate contacts expect sales during the rest of the year to be weak. One agent, whose remarks echoed many others', commented that \"There was a lot of front loading to take advantage of the tax credit, and it remains to be seen how much activity there will be going forward.\" For both new and existing homes, contacts reported little change in prices, although in some parts of the region where foreclosures and short sales have been common, real estate agents said existing house prices continued to be under downward pressure.\nNonresidential real estate firms indicated that vacancy rates in commercial and industrial buildings have been nearly steady or have moved up slightly in most parts of the Third District in the past few months. Leasing activity has been flat, and effective rents have been about level for Class A space but have moved down for Class B space. Construction activity has been weak. Some contacts reported that projects financed by federal stimulus funds are near completion or have been finished and that there are no immediate prospects for more major infrastructure construction. Commercial real estate contacts expect market conditions to show little change in the second half of the year. One said, \"We're stabilizing, but if companies cut space needs the market will be dragged down.\"\nServices\nService-sector firms generally reported slight improvement since the last Beige Book. Transportation companies reported increases in freight volume, and some information technology service providers have had slight recent increases in business. However, firms providing services to the construction industry continued to report low levels of activity. Looking ahead, most of the services firms contacted for this report expect growth to be slow and irregular for the rest of the year. One contact noted, \"Demand from customers is coming only on a project basis.\"\nPrices and Wages\nReports on input costs and output prices indicate little change since the last Beige Book. Most of the manufacturing firms polled in July reported no change from June in the costs of the commodities they use or the products they make. However, producers of primary metals raised prices. Home builders noted some increases in prices for lumber and drywall. Retailers generally noted that both wholesale costs and retail prices have been mostly steady. Across industries, firms reported increases in health-care costs as they negotiate new insurance contracts.\nBusiness firms in the region reported little or no upward movement in wages, and most indicated that they have had no difficulty in filling open positions. Employment agencies reported that client companies have been cautious in adding employees or replacing those who have left, although they have increased use of temporary workers on an as-needed basis. Labor markets remain slack, according to employers and employment agencies, who report that they generally get large numbers of applicants for permanent positions; however, they also noted that they get smaller numbers of applicants for temporary positions.\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 28, 2010\nEconomic activity in the Twelfth District appeared to pick up slightly during the reporting period of June through mid-July. Upward price pressures remained quite modest, and upward wage pressures were largely absent. Sales of retail items and services firmed a bit further. Reports from District manufacturers indicated continued expansion, although excess capacity remained high in some sectors. Sales were strong for agricultural producers, and demand for energy resources strengthened. Activity in housing markets was mixed but appeared to decline on net, while demand for commercial real estate was largely unchanged at very low levels. Contacts from financial institutions reported largely stable lending activity and credit quality.\nWages and Prices\nUpward price pressures remained very modest on net during the reporting period. While energy prices edged up and prices also rose modestly for selected industrial commodities such as steel and copper, final prices for most retail items and services continued to be held down by weak demand and excess capacity. Contacts in a few industries pointed to recent increases in shipping costs that they anticipate will be passed on to final prices later this year or in 2011.\nContacts in most sectors characterized wages as largely flat, although some pointed to significant increases in the costs of employee benefits, especially for health insurance. Upward wage pressures were negligible in most sectors and regions, held down by continued high levels of unemployment and limited hiring. Reports throughout the District indicated that most businesses expect to remain cautious in hiring for the foreseeable future. Contacts noted that their reliance on temporary workers over permanent hires will continue above historical norms.\nRetail Trade and Services\nSales of retail items were mixed but showed further modest improvement on net. While consumers remained focused on necessities and lower-priced options, reports indicated expanding consumer appetite for discretionary spending. Discount retail chains and traditional department stores both reported higher levels of sales, and a few contacts noted declines in promotional activity. By contrast, sales were characterized as largely flat for grocers, as well as furniture and household appliance retailers. Sales of new domestic and imported automobiles weakened slightly during the reporting period, although contacts noted that activity rebounded somewhat in recent weeks. Demand for gasoline strengthened but remained below historical averages for the season.\nDemand for services remained somewhat weak but exhibited further signs of improvement on balance. Contacts in the restaurant and food services industry reported modest increases in demand. For professional and media services providers, sales were largely stable at low levels. Contacts noted that potential clients increased their requests for bids, but the added interest produced only limited numbers of new commitments. Demand for hospital services was relatively flat, especially for discretionary services. Energy utilities reported further increases in demand from selected industries, such as technology, metal, and wood products. Conditions in the District's travel and tourism sector continued to improve. Business travel and convention activity picked up further, and visitor volumes and hotel occupancy rates rose in several of the District's major markets, particularly Hawaii.\nManufacturing\nDistrict manufacturing activity was mixed but appeared to strengthen a bit further on net during the reporting period of June through mid-July. Manufacturers of semiconductors and other information technology products reported further demand growth, with balanced inventories and continued strength in new orders. Production rates and deliveries picked up modestly for makers of commercial aircraft and parts. However, new orders remained limited and contacts expressed uncertainty about the strength of the airline industry recovery and prospects for future orders. While capacity utilization remained at low levels for companies in the metal fabrication sector, further demand improvements were noted, especially for items used to maintain or upgrade existing capital equipment. By contrast, apparel makers characterized conditions as \"flat.\" Despite improved demand, high inventory levels for gasoline and distillates prompted refineries to slow production.\nAgriculture and Resource-related Industries\nDemand was strong for agricultural products and improved for natural resources used for energy production. Orders and final sales remained robust for assorted crop and livestock products. Growing and grazing conditions have been favorable in recent months, and contacts noted that input costs have been largely stable. Strong global demand supported an increase in oil extraction activity during the reporting period, and extraction activity for natural gas continued at a solid pace.\nReal Estate and Construction\nDemand for housing in the District appeared to deteriorate somewhat from the previous period, while demand for commercial real estate was largely unchanged at very low levels. The pace of home sales remained mixed across areas but appeared to decline on net, even as home prices edged up further in some parts of the District. Several contacts noted again that limited availability of nonconforming \"jumbo\" loans is holding down sales of higher-priced homes in some areas. Conditions in commercial real estate markets remained depressed, as vacancy rates for office and industrial space stayed at very elevated levels in many parts of the District. One California contact noted that although only a few large commercial properties have sold in recent months, the prices received were surprisingly high.\nFinancial Institutions\nDistrict banking contacts reported that loan demand was largely stable compared with the prior reporting period. Demand for commercial and industrial loans continued to be restrained by business uncertainty about the economic environment. For most contacts, their current assessment of growth prospects for their firm and industry are the same or weaker than was their assessment in early 2010, with corresponding restraint evident in their planned capital expenditures. Demand for consumer loans was characterized as largely unchanged at low levels. Lending standards remained relatively restrictive for business and consumer lending, although reports pointed to signs of stabilization in overall credit quality.\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 28, 2010\nPrepared at the Federal Reserve Bank of St. Louis and based on information collected on or before July 19, 2010. 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.\nEconomic activity has continued to increase, on balance, since the previous survey, although the Cleveland and Kansas City Districts reported that the level of economic activity generally held steady. Among those Districts reporting improvements in economic activity, a number of them noted that the increases were modest, and two Districts, Atlanta and Chicago, said that the pace of economic activity had slowed recently.\nManufacturing activity continued to expand in most Districts, although several Districts reported that activity had slowed or leveled off during the reporting period. Districts also noted improved conditions in the services sector. The five Districts reporting on transportation noted increased activity. Tourism activity also increased across the Districts, although the Atlanta District noted concerns about decreased leisure travel to the Gulf Coast. Retail sales reports generally indicated a continued rise in spending, and several Districts noted that necessities continued to be strong sellers, while big-ticket items moved more slowly. However, most Districts that reported on auto sales noted declines in recent weeks. Activity in residential real estate markets was sluggish in most Districts after the expiration of the April 30 deadline for the homebuyer tax credit. Commercial real estate markets, especially construction, remained weak. Banking conditions varied across the Districts, with some Districts noting soft or decreased overall loan demand; credit standards remained tight in most reporting Districts. Recent rains had mixed effects on crop conditions, while activity in the natural resources sector increased. Overall labor market conditions improved modestly across the Districts, with several reports of temporary hiring. Consumer prices of goods and services held steady in most reporting Districts. Input prices also held largely steady, with only a few reports of cost increases. Wage pressures continued to be contained on the whole.\nManufacturing and Other Business Activity\nManufacturing activity in most Districts continued to move up since the last report, although the pace of activity slowed or activity leveled off in the New York, Cleveland, Kansas City, Chicago, Atlanta, and Richmond Districts. Automobile manufacturing was a bright spot for the Cleveland, Chicago, and St. Louis Districts. Automobile parts suppliers also experienced increased demand in both the Richmond and Chicago Districts. Fuel demand at refineries in the San Francisco District improved, while gasoline demand was steady in the Dallas District. Firms in the semiconductor manufacturing industry reported relatively strong sales or demand growth in both the Boston and San Francisco Districts. Firms in aircraft and parts manufacturing saw sales pick up in both the San Francisco and Dallas Districts. Manufacturing firms in the Boston, Philadelphia, Kansas City, and Dallas Districts were optimistic that demand would continue to improve in the following months. However, Cleveland's contacts expect demand growth to taper off, Philadelphia noted that the balance of positive over negative views had narrowed, and Atlanta reported fewer firms planning expansions in production. Richmond, Chicago, and Dallas reported that firms in construction-related manufacturing experienced weak demand; construction supplies sales were flat in Kansas City, and Minneapolis reported that a firm in the sector was increasing production. Steel production declined in both the Chicago and Cleveland Districts. Some manufacturers in the Atlanta and San Francisco Districts reported high excess production capacity. Capacity utilization was below pre-recession levels in Cleveland and edged lower among steel producers in Chicago.\nActivity in the services sector improved across most Districts since the previous report. The freight transportation industry experienced gains in the Cleveland, Atlanta, Kansas City, Dallas, and Philadelphia Districts. Boston, Minneapolis, and Dallas reported a pickup in demand for some consulting firms. Tourism activity increased in the San Francisco, New York, Minneapolis, Richmond, Kansas City, and Atlanta Districts. Atlanta reported that leisure travel decreased in the Gulf Coast, but some of the lost tourist traffic was offset by the presence of cleanup crews, oil company workers, and the National Guard. Information technology firms saw increased business in the Philadelphia, Chicago, and St. Louis Districts, while activity was flat in the Minneapolis District. Demand for healthcare services was flat in both the San Francisco and Richmond Districts, while activity increased in the Boston District.\nConsumer Spending\nReports on retail sales during the early summer months were generally positive, although in most Districts the increases were modest. Retail sales in the New York, Philadelphia, Minneapolis, and Kansas City Districts were higher than year-earlier sales, and Dallas reported solid gains. But sales in the Boston District were mixed compared with the previous year. Recent sales increased slightly in the Cleveland, Atlanta, Chicago, and San Francisco Districts; sales in the Richmond District weakened; and sales in the Kansas City District were flat compared with the previous report. Several Districts cited apparel, food, and other necessities as recent strong sellers, while big-ticket items were weak sellers. Contacts reported satisfactory inventory levels in the New York District, mixed inventory levels in the Boston District, and low or declining inventory levels in the Richmond, Atlanta, and Chicago Districts. The outlook for sales was mixed: Retailers in the Philadelphia, Cleveland, Kansas City, and Dallas Districts reported that they expect modest positive sales growth in the upcoming months; contacts in the Cleveland, Atlanta, and Chicago Districts reported a less optimistic outlook going forward than in the previous report; and retailers in the Boston District reported a cautious outlook.\nThe Districts that reported on auto sales during the early summer months generally noted a decrease in recent sales. Since the previous report, auto sales in the New York, Philadelphia, Cleveland, Richmond, Chicago, and San Francisco Districts declined, while auto sales in the Kansas City District increased and were unchanged in the Dallas District. Compared with last year, auto sales in the Atlanta and St. Louis Districts were higher. New York, Philadelphia, Cleveland, Chicago, Kansas City, and Dallas all reported that inventory levels were low or declining. Auto dealers anticipate little change in sales for the rest of 2010 in the Philadelphia District and expect sales to increase slowly in the Dallas District. Contacts in the Kansas City District expect continued strong demand, while those in the Cleveland District do not anticipate strong growth in the coming months.\nReal Estate and Construction\nNearly all Districts reported sluggish housing markets in the months since the homebuyer tax credit expired on April 30. While some Districts, such as Boston and St. Louis, reported an increase in May and June home sales on a year-over-year basis, some contacts noted that these sales may reflect closings of homes under contract by the April tax credit deadline. The Boston, Philadelphia, Atlanta, and Kansas City Districts reported that home sales are expected to weaken going forward. Residential construction remained limited in several Districts. In the Atlanta District, residential construction activity softened from already weak levels. Homebuilders in the Cleveland District do not expect a turnaround in new home construction any time this year. Builders in the Chicago District are not introducing new inventory without a signed contract on a home. Housing starts were expected to decline for the second half of the year in the Dallas District and to increase slightly over the next three months in the Kansas City District.\nCommercial and industrial real estate markets continued to struggle in all twelve Districts. Overall, vacancy rates were flat to slightly increased and continued to exert downward pressure on rents. Construction activity remained weak in most Districts. The New York District noted that commercial development remained generally sluggish despite some pickup in office and retail leasing in New York City. Atlanta, Minneapolis, and Dallas reported that construction activity continued to be weak or to decline, and Cleveland reported that the increase in construction from previous reports has begun to diminish. Philadelphia reported that projects funded with federal stimulus support were near completion with no prospects for additional major construction, while Chicago reported that public infrastructure construction picked up. Developers reported difficult credit conditions in the Cleveland, Richmond, St. Louis, and Kansas City Districts, while the Dallas District reported a few developers going out of business. The outlook for commercial and industrial real estate across the Districts ranged from further declines in activity to slow growth.\nBanking and Finance\nReports on banking conditions were largely mixed across the Districts. Banking activity in Richmond and loan demand in Kansas City increased modestly. Overall loan demand was reported as soft or weak in Cleveland, Atlanta, and Dallas, while total outstanding loan volume decreased in recent months in St. Louis but was steady in Philadelphia and San Francisco. Demand for commercial loans was flat to increasing in the Philadelphia, Cleveland, Richmond, Chicago, and Kansas City Districts; in contrast, St. Louis reported a decrease in commercial loans outstanding, while New York, Atlanta, and San Francisco reported restrained or decreasing demand in this lending category. Demand for consumer loans was weak in Cleveland and eased in Philadelphia; Atlanta and St. Louis indicated a decline in consumer lending; but demand for consumer loans increased in New York and Kansas City. Demand for residential mortgage loans eased in the Philadelphia District but increased in the New York District; Cleveland reported residential mortgage activity below expectations at given rates; and real estate lending decreased in St. Louis. Credit was limited for commercial real estate loans in Chicago, and demand fell for these loans in New York and Kansas City.\nMost Districts reporting on credit standards continued to note that lending standards remain restrictive. New York reported tighter credit standards for all categories except consumer loans, while Kansas City reported tighter commercial lending standards. Reports on credit quality were mixed in Cleveland and Kansas City, while quality was stable in San Francisco. Credit quality improved slightly in Philadelphia, Richmond, and Chicago. In the Dallas District, nonperforming loans have stabilized and are not expected to worsen. Meanwhile, Philadelphia, Cleveland, and Richmond continued to report delinquencies above historic norms. Delinquency rates in the New York District decreased for consumer loans but experienced little or no change in other categories.\nAgriculture and Natural Resources\nRecent rains improved the dry conditions in the Minneapolis and Dallas Districts and reduced irrigation needs in the Kansas City District. In contrast, excess precipitation caused some crop damage in the Chicago District and some delays in the winter wheat harvest in the Kansas City District. Parts of the Atlanta District experienced some crop stress due to dryness and heat. Contacts reported that crops were in good condition overall in the Atlanta, Minneapolis, Kansas City, and Dallas Districts, but crop conditions worsened slightly in recent weeks in the Chicago District and were mixed in the St. Louis District compared with last year. Producers in the Chicago District continued to expect good yields for their corn and soybean crops, and the outlook for cotton yields in the Dallas District has improved.\nOverall, activity in the energy sector increased since the previous report. Oil production in the Atlanta District and oil and natural gas production in the Cleveland District were relatively unchanged, but other activity picked up throughout the Districts during the reporting period. The number of drilling rigs increased in the Dallas District, and production continued to expand in the Kansas City District. Additionally, oil exploration in the Minneapolis District and oil extraction in the San Francisco District increased. Activity in the Minneapolis District's mining sector increased in recent weeks, as did production and demand for coal in the Cleveland District. Kansas City reported that contacts expect to see continued growth in energy production.\nLabor Markets, Wages, and Prices\nLabor market conditions improved gradually in several Districts. New York, Chicago, Minneapolis, Richmond, and Atlanta all reported that labor markets improved, albeit modestly in some cases, while Boston and Dallas reported that employment was steady. Philadelphia, Atlanta, Richmond, Chicago, and Minneapolis reported that temporary employment experienced increased demand. Contacts in the Philadelphia, Atlanta, Dallas, and San Francisco Districts said that they continued to rely on temporary staff over permanent hires. Cleveland, Richmond, and Chicago saw hiring in the manufacturing sector. Cleveland also reported some new job openings in the healthcare industry. Boston and Cleveland noted that firms in some services industries were hiring mostly for replacement. Dallas reported that firms in the energy industry experienced significant regional layoffs as a result of the deepwater drilling moratorium. San Francisco noted continued high levels of unemployment and limited hiring.\nWage pressures remained largely contained across most Districts. Boston, Philadelphia, Richmond, Minneapolis, and San Francisco reported little or no change in wages, while Cleveland, Chicago, and Kansas City reported that wage pressures were small or remained subdued. Dallas reported that wage pressures were mostly nonexistent, with the exception of the airline industry.\nPrices of final goods and services were relatively stable in most Districts. Several Districts indicated that prices of raw materials also held steady, and only a few Districts reported input price increases. Steel prices moved slightly higher in the San Francisco District, but Cleveland and Chicago reported that steel prices were down. Chicago and San Francisco noted an increase in energy prices, but Atlanta reported that energy prices were mostly stable since the onset of the Gulf oil spill. Increased prices were noted for some metals by the Philadelphia, Minneapolis, and San Francisco Districts. Transportation costs increased in the Atlanta, Dallas, and San Francisco Districts, and the Richmond District noted that shipping lines were attempting to raise rates.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

St Louis

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"Beige Book Report: St Louis\nJuly 28, 2010\nEconomic conditions in the Eighth District have continued to improve since our previous report. Manufacturing activity increased, on balance, as did activity in the services sector. Auto sales increased over a year ago. Residential real estate market conditions continued to improve across the District's largest metropolitan areas, while commercial and industrial real estate markets remained weak, especially construction. Overall lending activity at a sample of small and mid-sized banks in the District decreased from early April to late June.\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 and reduce operations. Firms in the furniture, plastics product, metal pipe, and plastics resin manufacturing industries announced plans to expand operations and hire new employees. Additionally, a major firm in the automobile manufacturing industry announced the opening of a new production facility. In contrast, firms in the motor and generator, furniture, and polystyrene foam product manufacturing industries announced that they will close plants in the District and lay off workers.\nActivity in the District's services sector has also increased since our previous report. A major software publishing firm has announced plans to open a new facility in the District and hire new workers. Additionally, a firm in nursing care services announced plans to relocate their headquarters to the District. In contrast, contacts in education services, air transportation support services, and the casino industry announced plans to decrease operations and lay off workers. Sales of new and used automobiles in recent weeks were reported as higher than a year ago and slightly above expectations.\nReal Estate and Construction\nHome sales continued to improve throughout the Eighth District. Compared with the same period in 2009, May 2010 year-to-date home sales were up 3 percent in Memphis, 12 percent in St. Louis, 19 percent in Little Rock, and 30 percent in Louisville. Residential construction also continued to improve throughout the District. May 2010 year-to-date single-family housing permits were up in most District metro areas compared with the same period in 2009. Permits increased 27 percent in Louisville, 31 percent in Little Rock, 36 percent in St. Louis, and 52 percent in Memphis.\nCommercial and industrial real estate market activity remained slow throughout most of the District. Contacts noted that financing requirements for new construction remained stringent and lease rates remained low. A contact in St. Louis reported that commercial leasing was up in some areas, but new commercial construction projects are not expected before mid-2011. Industrial real estate and construction contacts throughout the District continued to report a flat environment. A contact in Louisville reported that demand for industrial real estate continued to be weak. A contact in the Memphis area reported that while industrial leasing has improved somewhat, no new industrial construction is likely before the end of the year.\nBanking and Finance\nTotal loans outstanding at a sample of small and mid-sized District banks decreased 2.0 percent from early April to late June. Real estate lending, which accounts for 73.6 percent of total loans, decreased 1.9 percent. Commercial and industrial loans, accounting for 16.0 percent of total loans, decreased 2.5 percent. Loans to individuals, accounting for 5.3 percent of total loans, decreased 6.5 percent. All other loans, roughly 5.1 percent of total loans, increased 4.1 percent. During this period, total deposits at these banks decreased 1.2 percent.\nAgriculture and Natural Resources\nGenerally, development of the District's major crops remained ahead of its 5-year average pace. In mid-July, the overall condition of rice and cotton was rated as slightly better than last year, while the condition of corn, sorghum, and soybeans was rated as slightly worse. Farmers in the District states planned to harvest more acres of corn for grain and rice in 2010 than in 2009 but fewer acres of soybeans and sorghum for grain. The winter wheat harvest was complete or nearly complete in all District states. Based on July estimates, total winter wheat production in the District states was expected to be down 48 percent from last year. Since our previous report, pasture conditions deteriorated in most District states.\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 28, 2010\nDistrict economic activity was generally described as either mixed or modestly improving since our last report. While manufacturing remained a bright spot, the pace of activity reported in our last assessment appears to have eased somewhat--particularly among firms supplying the housing sector. Port authorities reported a pick-up in activity, led by recent increases in import volumes. Bank lending to businesses improved moderately, while home mortgage lending varied widely around the District. Tourism also strengthened. In addition, local labor markets posted modest gains, with temp agencies reporting gains especially from the manufacturing sector. On a weaker note, residential real estate agents and contacts at other services firms described activity as mixed. Finally, commercial real estate agents and retailers reported generally softer market conditions, but both sectors cited at least some pockets of improvement.\nRetail\nRetail sales weakened since our last report. Several auto dealers reported that light vehicle sales dropped, and a North Carolina medical devices supplier said payers were trying to negotiate lower reimbursement rates on durable medical equipment. In addition, a contact at a large home and garden chain reported that impulse buying fell, and that home remodeling purchases had scaled back dramatically as consumers \"splurged small.\" Overall, according to our District survey, big-ticket purchases and shopper traffic plummeted. Many District retailers indicated that inventories continued to decline in recent weeks. Merchants increasingly cut jobs, and retail prices advanced only slightly faster since our last report.\nServices\nContacts and survey respondents at non-retail services firms reported mixed activity during the past four weeks. For example, several businesses indicated that their revenues had contracted, while others reported an uptick, with the caveat that they are not seeing significant strengthening in their markets. Several contacts at professional, scientific, and technical firms said their businesses experienced increased demand for services since our last report, while a financial advisor at an investment services firm said conditions were \"stable.\" Several healthcare-related businesses cited little change in demand in recent weeks, but a West Virginia nursing home administrator said the economy and healthcare reform put downward pressure on his business. Many respondents to our service sector survey reported that price increases slowed at services firms.\nManufacturing\nDistrict manufacturing continued to expand in June and early July, albeit at a slower pace than a few months ago. Most of our District survey respondents reported that growth in their shipments and new orders had moderated, while several contacts noted that their employment edged higher. A parts supplier reported a significant increase in demand from auto manufacturers, with business being well ahead of expectations. In addition, a tire producer informed us that his customers had depleted their inventories, which caused him to expect an increase in orders soon. Moreover, a contact at a textile plant commented that his company had built inventory in anticipation of continued price increases for synthetic fibers. He noted, however, that his customers continued to maintain low inventory levels, with current sales higher than replenishment rates. In contrast, a furniture manufacturer noted that his company had reduced its workforce by half due to weak conditions in the housing market. Similarly, a manufacturer of exterior doors for residential housing indicated that the previous uptick in demand for building products had now vanished.\nPort activity in the District picked up since our last report. One contact stated that total shipping volume at his port was back to pre-recession levels. While exports had been improving over much of this year, he noted that imports were now increasing as well. A contact that handles a variety of roll-on cargo stated that about two-thirds of the recent gains in port activity were being driven by imports. At least some of the import gains were attributed to inventory restocking. Several port officials noted that shipping lines were attempting to raise rates.\nFinance\nBanking activity over the last six to eight weeks improved modestly, but gains were uneven. For example, several bankers noted an increase in commercial lending, although one lender stated that commercial lending had weakened. Contacts noted that increased lending went to support high-tech and export activity, as well as auto dealer inventory. An increase in merger and acquisition activity was also noted by several sources. One banker reported a marginal improvement in small business lending, while an analyst for a large bank reported a retrenchment in consumer borrowing. A small community banker stated that the bank's own auto loans had edged down as other banks returned to the market, increasing loan competition. Reports on home mortgage lending varied, with some bankers reporting improvements and others still experiencing declines. A loan officer at a community bank stated that refinancing was a significant portion of his mortgage lending activity in recent weeks. Most contacts stated that credit quality was slowly improving from a weak base, although one source noted that delinquencies on both residential and commercial loans were still \"off the charts.\"\nReal Estate\nReports from residential Realtors varied across the Fifth District. Several contacts reported that home sales slowed since the expiration of the federal government's tax credit program. However, other contacts indicated that sales in the upper-middle price bracket were still moving, at least in some areas of the District, while one agent noted that single-family homes in suburban neighborhoods were experiencing the most activity. Another agent reported that houses priced below $150K remained the best sellers, due to more foreclosure-related and short sales. A Realtor in Richmond reported that the metropolitan market in recent weeks did not meet the company's expectations in July. An agent for a major realty chain noted that the average number of days on the market for most homes remained high.\nCommercial real estate markets continued to weaken since our last report, with at least one contact not expecting improvements until well into the future. According to one contact in North Carolina, vacancy rates in most metro areas remained relatively high and were still rising in some areas. Vacancy rates were particularly high in the retail sector in both Richmond and Baltimore, according to several agents. Retail and office leasing activity was reported to be improving in Columbia, S.C., as well as in parts of North Carolina. Commercial rental rates in parts of North Carolina were being driven down by property owners' fears that things could get worse, and an agent stated that retail rental rates remained negotiable in Richmond. One contact stated that new construction financing was \"not going at all.\"\nTourism\nTourist activity increased since our last report. Along the coast, contacts reported that bookings over the July 4th holiday weekend were much stronger than a year ago. A hotelier from Virginia Beach noted that his hotel was filled to capacity, even though room rates had jumped dramatically. A contact in Myrtle Beach said that visitation was up 10 to 12 percent in recent weeks compared to a year ago, but consumer spending was still below pre-recession levels. He attributed some of the increase in visits and spending to tourists changing vacation plans from the Gulf to the eastern seaboard. Moreover, an analyst from the Outer Banks of North Carolina indicated that restaurants were full and sales at gift shops were flourishing. Managers at mountain resorts reported that holiday reservations were the best in years and that time shares were rented for most of the summer. They noted, however, that although tourists were spending slightly less on food, they were spending considerably more on recreational activities and merchandise.\nLabor Markets\nLabor market activity picked up slightly in recent weeks, according to most contacts. Several firms reported adding jobs for at least a third straight month. A services firm increased its hiring due to rising demand, but several retailers reported job cuts. Temporary employment agents reported slow, but steady increases in hiring by small or mid-sized businesses--especially in manufacturing. For example, a contact at an automotive plant told us that temporary employment workers had been hired to help with the increase in production. One temp agent noted an increase in the number of employees being hired on a permanent basis by his clients. Increased demand for temporary workers was reported for a diverse set of industries, including warehouse and distribution centers, manufacturing plants, and pharmaceutical firms. Most respondents to our manufacturing and service sector surveys indicated that wages were little changed since our last report.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

New York

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"Beige Book Report: New York\nJuly 28, 2010\nThe Second District's economy has shown further signs of strengthening, on balance, since the last report. Input price pressures have receded a bit, while consumer prices appear to be steady. There are signs of improvement in the labor market across a range of industries. Manufacturing-sector contacts report some recent leveling off in business activity, after a strong second quarter. General merchandise retailers report ongoing improvement in business, with sales running on or above plan and inventories reported to be at favorable levels. Auto dealers report that sales have tapered off in recent weeks but remain ahead of 2009 levels. Tourism activity in New York City has continued to be robust since the last report, helped by a reported pickup in business travel. Commercial real estate markets have generally been steady since the last report, while residential real estate markets have shown signs of softening. Finally, bankers report a pickup in demand for both consumer and home mortgage loans but some slippage in demand for commercial loans and mortgages; they also report declining consumer delinquency rates and less widespread tightening in credit standards than in recent months.\nConsumer Spending\nNon-auto retailers report that sales have remained on or above plan since the last report, with comparable-store gains of roughly 5 percent over a year earlier in June and 8-12 percent in early July. Contacts report particular strength at New York City stores, whereas a major mall in upstate New York indicates more moderate growth. Contacts generally indicate that sales of fashion items and apparel were particularly strong, whereas sales of big-ticket appliances were relatively sluggish. Inventories are reported to be at satisfactory levels, while selling prices are stable to down slightly; prices are expected to remain steady during the second half of 2010 and rise modestly in 2011.\nAn association of auto dealers in upstate New York reports that sales of new autos, which were up 10 percent from a year earlier in May, retreated a bit in June but were still up moderately from comparable 2009 levels. Used auto sales have been running lower than a year ago, due largely to lean inventories. Dealers report that retail credit conditions have remained favorable and that wholesale credit conditions have improved. Consumer confidence weakened noticeably in June: The Conference Board reports that confidence among residents of the Middle Atlantic states (NY, NJ, Pa) fell to its lowest level this year, and Siena College's latest survey of New York State residents shows confidence slipping to its lowest level in more than a year.\nTourism activity in New York City has grown increasingly robust since the last report. Manhattan hotels indicate that occupancy rates rose to a record high for May and remained exceptionally high in June--even with a sizable increase in the number of hotel rooms over the past year. Room rates are running 10 to 15 percent higher than a year earlier, and total revenues are reported to be up more than 20 percent. Much of the recent improvement is attributed to a rebound in business travel. Broadway theaters report that attendance remained brisk in June but tapered off moderately in early July. Revenues were up 3 percent from a year earlier in June and little changed in July.\nConstruction and Real Estate\nHousing markets have softened somewhat, on balance, since the last report, with much of the weakening attributed to the expiration of the home-buyer tax credit. An authority on New Jersey's housing industry characterizes housing demand as sluggish and lacking momentum. Activity has tapered off, while transaction prices for both new and existing homes appear to be drifting down. Northern New Jersey's rental market has also slackened, with a growing number of available units on the market and landlords offering more incentives and concessions; a number of buildings initially intended as condos have converted to rentals. Similarly, Buffalo-area Realtors report that home sales activity weakened substantially in May and June, reportedly due largely to the expiration of the extended homebuyers' tax credit, though selling prices continued to run ahead of comparable 2009 levels.\nIn New York City, conditions were more mixed, with co-op and condo sales activity picking up in the second quarter but prices generally holding steady. The number of apartment sales rose by a bit more than the seasonal norm in the first quarter. The median sales price of an apartment was down 7 percent from a year ago in Queens but up 5 percent in Brooklyn. In Manhattan, the median price rose roughly 8 percent from a year earlier, but the price per square foot was virtually unchanged. Manhattan's rental market, though still well below its peak of a few years ago, appears to be on the rebound: leasing activity picked up noticeably, rents have stabilized, landlords are giving less generous concessions, and the inventory of available rentals has declined.\nCommercial real estate markets across the District were mixed but, on balance, little changed since the last report. Office leasing activity picked up considerably in New York City, and vacancy rates declined modestly, but asking rents are still down more than 20 percent from a year ago. Vacancy rates were steady in Long Island and Northern New Jersey, while asking rents were down slightly--compared to both the first quarter and a year earlier. In Westchester and Fairfield counties, market conditions improved slightly, as vacancy rates edged down and asking rents rose. Office markets were mixed in upstate New York: vacancy rates edged up in most major markets but asking rents continued to run modestly above year-ago levels. Industrial markets were mostly softer in the second quarter: industrial vacancy rates rose across most of upstate New York and in Westchester and Fairfield counties but were little changed in Long Island and down modestly in northern New Jersey. Industrial rents were down moderately from a year ago in most areas. Finally, Manhattan's retail leasing market picked up in the second quarter, while northern New Jersey's remained stable. Commercial development remains very sluggish in general, though developers plan further hotel construction in New York City.\nOther Business Activity\nManufacturing firms in the District report some leveling off in business activity in recent weeks, after reporting fairly widespread improvement in the second quarter. Firms still report that they are adding workers, on net, but to a less widespread degree than in recent months. Contacts outside the manufacturing sector, however, report some recent improvement in general business conditions and a pickup in employment. Contacts also remain fairly optimistic about the near term outlook and plan to expand hiring activity and capital spending moderately in the months ahead. Both manufacturers and other firms report moderate increases in prices paid but virtually no change in selling prices.\nA major NYC employment agency, specializing in office jobs, reports that hiring activity has picked up since the last report, as demand from the legal sector remains brisk and financial sector hiring has picked up in recent weeks. Salaries for administrative jobs have started to edge up. There has been a relatively light flow of 2010 college grads looking for jobs. Separately, a securities-industry contact notes that, while there are ongoing layoffs in certain areas related to mergers and restructuring, major firms are hiring in the areas of accounting, compliance, and systems development. Compensation at large financial firms is reported to be holding relatively steady.\nFinancial Developments\nContacts at small to medium sized banks in the District report that loan demand was mixed across the consumer and commercial loan groups: demand tended to increase for consumer loans and residential mortgages but decrease for commercial mortgages and commercial and industrial loans. This marks the first time since 2005 that more respondents reported rising than falling consumer loan demand. Bankers' responses also suggest a continued increase in refinancing activity.\nRespondents indicate a tightening of credit standards for all categories except consumer loans, though the tightening across all segments is reported to be less widespread than it has been at any time in the past three years. Spreads of loans rates over cost of funds are indicated to be steady for consumer loans and residential mortgages but higher on commercial loans and mortgages. Banks mostly indicate that average deposit rates have decreased. Finally, respondents reported a decrease in delinquency rates for consumer loans but little or no change in delinquencies in other loan categories.\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 28, 2010\nThe Ninth District economy grew slightly since the last report. Consumer spending, tourism, manufacturing, energy, mining and agriculture saw increases. Residential construction and the services sectors experienced mixed activity, while commercial construction remained weak. Commercial and residential real estate activity decreased. Labor markets continued to strengthen somewhat. Wages were generally level with a year ago, and price increases remained restrained.\nConsumer Spending and Tourism\nConsumer spending increased modestly. A major Minneapolis-based retailer reported that same-store sales in June were up almost 2 percent compared with a year earlier. A mall manager in North Dakota noted that recent sales were up 4 percent over last year and were running a little ahead of 2008, when activity was relatively strong. In South Dakota, a mall manager noted that recent sales were mixed; consumers remained cautious as traffic continued to be driven by promotions. A Montana auto dealer noted that June sales were behind a year ago, but July sales have picked up substantially.\nSummer tourism was up slightly from a year ago. Representatives of South Dakota tourism businesses and attractions noted that the early part of the summer season was going well. In western Montana, hotel bookings were about the same as a year ago, while Glacier National Park is expected to have a record year due to its 100th anniversary celebration. Tourism activity in the Upper Peninsula of Michigan was about the same as last year. Meanwhile, a Minnesota travel agency noted that corporate sales were up about 20 percent during June and early July compared with 2009.\nConstruction and Real Estate\nCommercial construction remained weak. A commercial contractor in Montana said that the number of projects up for bidding decreased; existing projects were smaller and had more bidders. In contrast, a heavy infrastructure contractor in Minnesota and Wisconsin saw improvement in its market segment. In addition, the value of June commercial permits in Sioux Falls, S.D., nearly doubled from the previous June. Residential construction was mixed. June residential permits increased slightly in value for the Minneapolis-St. Paul area and for Fargo, N.D., compared with the same month a year earlier. However, residential permits decreased substantially in value in Sioux Falls and Rochester, Minn.\nWeakness remained in the commercial real estate sector. Office vacancy increased in Minneapolis-St. Paul. A commercial real estate broker in western Montana characterized the market as level with last year's slow activity. Residential real estate activity softened slightly. The number of closed sales in Minneapolis-St. Paul decreased in June from a year earlier. A real estate agent in Fargo said activity was steady, but not as active as usual for this time of year. Meanwhile, a Realtor in northeastern Minnesota recently noticed an increase in inquiries for properties.\nServices\nActivity in the professional business services sector was mixed since the last report. An engineering firm that supports the mining and energy sector noted an increase in activity. A human resources consulting firm noted a slight uptick in new business. Architectural firms reported slow demand. Information technology consultants reported that business was flat with a lot of maintenance projects rather than new software development. A firm that assists nonprofits noted a slight decrease in activity. A Minnesota energy management consultant noted an increase in orders.\nManufacturing\nManufacturing output was up since the last report. A June survey of purchasing managers by Creighton University (Omaha, Neb.) showed that manufacturing activity increased significantly in Minnesota and the Dakotas. A construction equipment manufacturer in North Dakota was increasing production. A South Dakota wind energy equipment producer increased production significantly due to increased demand.\nEnergy and Mining\nActivity in the energy and mining sectors increased since the last report. Mid-July oil exploration increased from early June. Wind energy projects have come online, and more are planned in the western portion of the District. In Montana, a company applied for permits to develop an underground gold mine. A Montana copper mine was \"doing excellent,\" according to an official, due to strong production and prices. However, iron ore production in Minnesota decreased in June compared with May because of maintenance at one of the mines.\nAgriculture\nAgricultural activity increased. The U.S. Department of Agriculture raised the price estimates for corn, soybeans and wheat. The vast majority of the District corn and soybean crops were rated as either good or excellent. Meanwhile, drought conditions eased across most of the District, but some areas were experiencing excess moisture.\nEmployment, Wages, and Prices\nLabor markets continued to strengthen somewhat. According to respondents to a recent St. Cloud (Minn.) Area Business Outlook Survey, 28 percent expect to increase staffing levels at their companies over the next six months, while 9 percent expect to decrease staff. In last year's survey, 19 percent expected to boost hiring, while 12 percent anticipated decreases. A recent survey of businesses conducted by the North Dakota Chamber of Commerce showed that 39 percent expect to increase staffing in the next six months; the majority of respondents expect to keep payrolls level.\nIncreases in temporary employment were noted. A representative of an employment services firm in Minneapolis-St. Paul reported that demand for temporary workers has continued to grow during the past two months. In the Dakotas, demand for seasonal construction employment was up; however, temporary construction and manufacturing employment was slow in the Duluth, Minn., area, according to bank directors. In northwestern Montana, two employment offices reported that postings for temporary and part-time listings were up; however, overall job orders by employers were down 50 percent compared with a year ago. Signs of continued weakness also include an announcement that a bank will lay off about 80 employees in Minnesota.\nWages were generally level with a year earlier. Over 70 percent of respondents to the St. Cloud survey expected no changes in employee compensation over the next six months. A nurses union and 14 hospitals in the Minneapolis-St. Paul area agreed on a contract that averted an open-ended strike; pension and health benefits were not changed.\nPrice increases remained restrained. Minnesota gasoline prices at the beginning of July were about the same as prices a month earlier. Bank directors noted that prices have remained generally level for area businesses with some exceptions. Significant increases included copper and brass products in electrical wiring, steel fencing materials and unemployment taxes. Scrap metal prices were above year-ago levels, but dropped during the past month.\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 28, 2010\nThe Eleventh District economy expanded at a moderate pace over the past six weeks, although business outlooks were slightly more cautious. Respondents in most sectors said activity improved or held steady since the last report. The notable exception came from homebuilders and construction-related manufactures who said demand dropped off following the expiration of the first-time homebuyer tax credit. The majority of Eleventh District respondents expect economic conditions to remain positive, but many expressed uncertainty about the pace of future growth. Numerous contacts said uncertainty regarding fiscal and financial reforms was restraining business activity.\nPrices\nSelling prices held steady for most responding firms. There were scattered reports that rising input costs were squeezing margins. Notably, paper producers said linerboard prices continued to rise, and high-tech firms said supply-chain problems had increased costs for producers. Some transportation service firms had raised fees but reduced fuel surcharges. Lumber producers said prices had come down since the spring run-up, and staffing firms continued to note pressure to reduce fees. Contacts in residential construction said industry consolidation has led to fewer concessions in pricing.\nCrude oil prices traded in a range of about $70 to $75 per barrel from late May through early July, down from the previous report. On-highway prices of both gasoline and diesel fell about 5 percent during the reporting period. Natural gas prices mostly ranged between $4.50 and $5.00 per Mcf--moving up briefly over $5.00 per Mcf in June. The increase in petrochemical prices seen earlier in the year due to capacity outages has reversed course.\nLabor Market\nThe majority of respondents noted steady employment levels, although there were scattered reports of hiring activity. Staffing firms said demand continued to increase for their services, and some contacts in residential construction, construction-related manufacturing, aircraft manufacturing and auto sales had added workers. On a less positive note, contacts in the energy industry said the moratorium on deepwater drilling resulted in significant regional layoffs, although energy service companies were shifting Gulf Coast workers to land or shallow water projects when possible. Wage pressures were mostly nonexistent, with the exception of the airline industry. Although the overall labor market remains slack one transportation service provider was offering signing bonuses to truck operators, and a few firms noted difficulty finding skilled workers.\nManufacturing\nMost construction-related manufacturers reported a slowdown in activity, and outlooks were less optimistic than in the previous report. Producers that sell to the homebuilding industry said orders dropped off more than expected following the expiration of the first-time homebuyer tax credit. Contacts also reported declines in private nonresidential construction. Fabricated metals producers said sales growth flattened since the last report, while primary metals firms said activity picked up slightly, but was bouncing along the bottom.\nProduction and new orders for high-tech manufacturing continue to grow at a strong pace. Capital expenditures that were postponed during the recession are driving purchasing, according to respondents. Inventories were in good shape, having built up from extremely low levels early in the year. Respondents expect demand to continue to grow at a strong pace for the next three to six months, but there is increased uncertainty about the outlook for 2011.\nManufacturers of aircraft and parts said sales had improved, with orders coming mostly from the commercial and general aviation industries. Budget cutbacks have curbed governmental and military sales. An aircraft repair contact said growth in demand had softened slightly, and the backlog of orders had dropped. Orders for emergency vehicles remained flat and backlogs edged down, but not as much as contacts had expected given budget strains among municipalities.\nReports on demand for paper products were mixed, but most contacts said sales are about even with or slightly higher than a year ago. Food producers noted increased demand, and outlooks were positive.\nProducers of petrochemicals used in housing and commercial construction (PVC) said orders fell since the last report, and expectations are for no near-term improvement. Other than PVC, there were no signs of weakness in chemicals. Demand was strong for petrochemicals used in manufacturing, pulp and paper and alumina. In addition, contacts said domestic demand for ethylene/polyethylene products remained solid, and that export demand has returned slowly as capacity was restored and prices declined. Refiners said gasoline demand was steady in recent weeks while diesel demand has improved. Refinery utilization rates improved to near 90 percent, as refiner margins remain relatively strong.\nRetail\nReports from retail contacts point to solid growth. Department store sales were slightly stronger than anticipated, but the pace is expected to moderate in the second half. Consumers continue to deleverage and correspondingly remain price sensitive. Sales growth in the Eleventh District tracked slightly below the nation. Expectations are for continued gradual improvement through year-end.\nAutomobile sales were unchanged over the reporting period, and contacts said inventories were lean. The outlook is cautiously optimistic, with sales expected to rise slowly.\nServices\nMost staffing firms report strong demand across a wide range of industries. The majority of placement activity continues to be conversions of temporary workers to hires. Direct placement remains reduced as businesses are hesitant to add to permanent payrolls. While near-term outlooks remain optimistic, respondents are still cautious about the longer term. Demand for accounting services was sluggish, but above year-ago levels. Tax-related services slowed seasonally, but transactional and consulting activity picked up slightly. Demand for legal services held steady at low levels, but most contacts were slightly more optimistic in their outlooks. Accounting and legal contacts said uncertainty about fiscal and financial reform was holding back business activity.\nDemand for transportation services strengthened. Several contacts said cargo volumes were up considerably, with the increases being broad-based across industry sectors. Railroad respondents noted cargo volumes rose strongly across the board, with a particularly large increase in metals that was likely due to an improved auto industry and stronger demand for home appliances. Shipping firms said retail trade was boosting volumes for small package shipping. Airline traffic was down slightly since the last report, but up strongly compared to a year ago. Outlooks for the transportation services industry were generally positive but cautious.\nConstruction and Real Estate\nBuilders of low-to-moderate priced homes reported a significant drop off in housing sales in May and June following the expiration of the first time-homebuyer tax credit. The pace of decline slowed in early July, and some contacts are hopeful the tax-credit \"hangover\" may be over. New home starts overall are expected to come down in the second half of the year, and outlooks for the homebuilding industry remain guarded. Existing home sales softened slightly in recent weeks, according to contacts, but activity for the year is up from the same period in 2009. Apartment demand continues to improve.\nCommercial real estate markets remain weak. While a few lease deals have taken place, demand for space overall remains subdued and rents are edging down. As such, nonresidential construction activity continues to decline, and there were a few reports of developers going out of business. On a positive note, contacts said improvement in debt markets had spurred some property sales, and prices were up from the trough. One contact noted an increase in lender sales as banks work through nonperforming loans.\nFinancial Services\nLoan demand remained soft with weakness across all categories. Nonperforming loans have stabilized and are not expected to worsen, although contacts said it will be a while before they come down noticeably. Deposits were mostly steady, but responding institutions said fewer loans pushed down the loan-to-deposit ratio. An over-riding theme among financial industry respondents is uncertainty over fiscal and financial reform legislation that has created a wait-and-see mentality. The uncertainty is delaying transactions, depressing loan activity and causing some institutions to look for alternative ways to grow loan portfolios and earnings.\nEnergy\nThe U.S. and District rig counts increased during the reporting period, despite a drop of 39 rigs in the Gulf of Mexico. As the share of oil-directed drilling continues to rise, natural-gas directed drilling was surprisingly steady despite high inventories and low prices. Some contacts noted that shale activity is stronger than prices justify due to urgency to secure leases in new basins and an influx of foreign capital attracted by new shale technology.\nAgriculture\nTropical storms brought widespread rains to Texas, particularly benefitting parts of the state that had been getting dry. Favorable crop conditions and robust forage production on pastures have increased optimism among agricultural producers. Cattle prices have declined, though ranchers still anticipate strong prices compared to last year. The recent rainfall will boost yields for Texas cotton, potentially pushing down prices.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Kansas City

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"Beige Book Report: Kansas City\nJuly 28, 2010\nThe Tenth District economy generally held steady in June and early July, despite weak real estate conditions. Consumer spending remained higher than year-ago levels and was expected to rise over the next three months. Manufacturing activity expanded slightly, but at a slower pace than in previous months. Transportation and high-tech firms reported increased activity. As expected, residential real estate activity contracted sharply in response to the expiration of tax credits. Commercial real estate conditions weakened, and activity was expected to slow in the months ahead. Bankers reported slightly increased loan demand and did not anticipate a change in loan quality over the next six months. Energy production expanded, raising expectations of increased employment and capital spending over the coming months. Agriculture conditions remained positive, and farmland values stayed above year-ago levels. Wage and retail price pressures remained subdued.\nConsumer Spending\nConsumer spending remained higher than a year ago, and contacts anticipated gains over the next three months. District retailers reported that sales in June and July were flat relative to the previous survey period but remained above year-ago levels. Retailers expected sales to rise over the next three months and a continued downward trend in prices. Auto sales increased in response to higher discounts, and dealers expected strong demand to persist in the coming months. Auto dealers reported continued declines in inventories. Restaurant sales were flat compared to the previous survey, but the average check amount fell. Tourism activity rose over the past month and was expected to remain strong during the summer months. Hotel occupancy rates increased more than anticipated, but contacts expected to give up some of these gains in the coming months.\nManufacturing and Other Business Activity\nGrowth in manufacturing activity eased slightly in June, while transportation and high-tech firms reported solid growth in sales and activity. Production at manufacturing firms continued to rise, but the pace of growth slowed for the second consecutive month. The volume of new orders, shipments, and finished goods inventories were flat compared to May, but the backlog of orders at manufacturing firms declined. Manufacturing activity continued to improve compared to a year ago, and firms remained optimistic about production and employment over the next six months. Capital spending continued to decrease compared to year-ago levels, and firms expected slightly less investment over the next six months. Transportation firms saw an increase in activity when compared to both the previous period and a year ago. Some firms continued to have difficulty finding qualified drivers. Most transportation firms planned to increase their capital spending the next six to twelve months. The high-tech industry reported an increase in activity over the previous survey period and expected strong growth during the next three months.\nReal Estate and Construction\nResidential and commercial real estate activity declined since the last survey period. With the expiration of tax credits, residential sales dropped sharply resulting in higher inventories of unsold homes. Residential real estate contacts continued to report that lower-priced homes sold better than higher-priced homes. Over the next three months, real estate agents anticipated slower sales. However, builders reported higher traffic from potential buyers and expected starts to rise slightly the next three months. Despite flat construction supply sales since the previous survey, construction supply contacts also expected sales to increase during the coming months. Refinancing activity increased amid declining interest rates. Commercial real estate contacts reported that conditions weakened after improving slightly in the previous survey, including higher vacancy rates and declining sales, construction, prices and rents. Commercial real estate conditions were expected to worsen over the next three months. Developers reported increasing difficulty accessing credit.\nBanking\nBankers reported slightly increased loan demand, stable deposits, and an unchanged outlook for loan quality. Overall, loan demand edged up after holding steady in the previous survey. Demand for consumer installment loans increased. However, demand fell for commercial real estate loans and was little changed for commercial and industrial loans and residential real estate loans. Credit standards on residential real estate loans and consumer installment loans were unchanged, but a few banks tightened standards on their commercial and industrial loans and commercial real estate loans. About the same number of bankers reported an improvement in loan quality, compared to one year ago, as reported a deterioration. Also, for the second straight survey, respondents expected no change in loan quality over the next six months. Deposits were unchanged, consistent with their overall stability since late last year.\nEnergy\nEnergy production continued to expand, and firms expected activity to grow further in the coming months. Growth in the number of active drilling rigs slowed relative to strong gains earlier in the year. Crude oil prices were expected to remain unchanged due to a steadying of supply and demand conditions. Firms reported that they planned to increase the workforce the next three months, but some contacts noted difficulty finding qualified workers. However, they did not anticipate having to raise wages in order to attract workers. Capital spending was expected to increase over the next six to twelve months, and several firms mentioned the potential of developing the Niobrara oil shale in northeastern Colorado and eastern Wyoming.\nAgriculture\nAgricultural conditions remained positive since the last survey period. Ample moisture reduced the need for irrigation, and the corn and soybean crops were reported in generally good or better condition. Wet weather, however, delayed the winter wheat harvest. While many areas expected an abundant wheat crop, there were some reports of hail damage and poor quality yields, especially in Oklahoma. Corn and soybean prices held steady while wheat prices rallied slightly, mainly due to expectations of a smaller global wheat harvest. Livestock operations continued to be profitable with recovering demand for beef and pork. Farmland values remained above year-ago levels. Farm loan demand held steady, and ample funds were available at low interest rates for qualified borrowers.\nWages and Prices\nWage and retail price pressures remained low in June and July. District firms reported a slight uptick in the shortage of qualified labor, but wage pressures stayed at low levels. Retail prices continued to decline compared to both the last survey period and a year ago. Builders and construction supply firms expected prices to remain at current levels over the next three months. Raw material prices at District manufacturers grew during the survey period, but the pace of growth slowed considerably. Meanwhile, transportation companies continued to experience higher input prices. Overall, District contacts planned to keep prices at their current level the next three months.\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 28, 2010\nReports from Sixth District business contacts indicated that the pace of economic activity slowed somewhat in June and early July. Retailers reported a slight increase in traffic and sales, but their outlook was less optimistic than the last report. Tourism reports were generally positive, however, significant concerns were expressed over the potential impact from the oil spill on the Gulf coast. Residential real estate contacts suggested that the pace of new and existing home sales slowed, and their outlook was pessimistic. Commercial real estate remained weak. Manufacturers saw a slight deceleration in activity as the pace of new orders and production growth slowed. Banking credit conditions remained tight and loan demand was subdued. Businesses continued to increase the hours worked of existing staff and to expand their use of temporary hires. Permanent hires were less apparent. Transportation and material costs rose slightly, but most firms expressed no intention of passing these increases along to consumers.\nConsumer Spending and Tourism\nMost District merchants noticed a slight increase in traffic and sales in June and early July. Retailers also mentioned that despite the uptick in sales, they continued to keep inventory levels low. Although most merchants have reported improved conditions since the beginning of the year, sales levels remained well below pre-recession levels. The outlook among retailers was more subdued than in previous months. Automotive dealers reported that sales improved from a year ago.\nOverall, tourism continued to show signs of improvement compared with last year. Reports from Miami and New Orleans indicated that business-related travel and convention bookings remained positive. Leisure travel was positive in most District destinations except for the Gulf coast where significant concerns were reported over the oil spill and its impact on tourism. Hospitality contacts in the area remarked that some cancelled bookings have been substituted by the presence of clean-up crews, oil company workers, and the National Guard. Contacts not located along the Gulf coast have stated that there have been increased bookings as a result of deflected business from oil-affected areas.\nReal Estate and Construction\nDistrict residential real estate brokers and homebuilders reported that home sales weakened notably in June and early July on a year-over-year basis. Contacts also indicated that sales fell on a month-over-month basis. However, several brokers remarked that June sales were boosted by closings associated with the housing stimulus. Buyer traffic continued to soften across the region. Realtors noted that existing home inventories rose outside of Florida on a year-over-year basis, while Florida inventories declined modestly. Similar inventory trends were seen on a month-over-month basis. New home inventories remained below the year-earlier level, and construction activity softened from already weak levels. Both Realtors and builders shared concerns about the housing market going forward; the outlook weakened and sales growth over the next several months is anticipated to be slightly negative.\nNonresidential construction activity continued to be weak. The majority of contacts noted that the pace of commercial development was below the year-earlier level and backlogs remained at low levels. Vacancy rates were high across the District and contacts witnessed downward pressure on rents. The outlook for the rest of the year remained negative.\nManufacturing and Transportation\nAlmost half of District manufacturers contacted stated that new orders and production grew at a slower pace in June than in the previous report. The number of firms experiencing higher levels of orders decreased notably compared with the previous report, while the number of contacts planning to expand production in the near future dropped as well. Freight activity remained above weak year-earlier levels, led by increased shipments of motor vehicles, metals, and chemicals.\nBanking and Finance\nIndustry reports indicated that banking conditions weakened across much of the District. Several bankers reported that credit remained available to qualified customers. Consumers seemed reluctant to take on additional debt, however. Contacts also cited declining credit card use as consumers continued to deleverage. Business loan demand was also muted.\nEmployment and Prices\nPrivate payroll employment increased slightly through early July across the District, although many businesses maintained a strong preference for increasing existing staff hours and using temporary staff rather than hiring full-time, permanent employees. In addition, the outlook regarding labor market conditions along the Gulf coast remained tempered by the impact from the oil spill.\nDespite reports of raw materials and transportation cost increases, most firms conveyed no plans to pass the increases on to consumers. Several contacts remarked that excess production capacity and competition continued to put downward pressure on prices in a variety of sectors.\nNatural Resources and Agriculture\nLocal energy prices and oil production have remained mostly stable since the onset of the oil spill in late April. Gulf of Mexico crude inventories continued to hover near the top of their average range for this time of year. Nonetheless, a number of businesses expressed concern about the potential impact on long-term energy production and employment from the deepwater drilling moratorium. Industry reports noted recertification of deep and shallow water rigs/wells was underway. Meanwhile, contacts indicated that Gulf ports were operating normally and commerce along the Mississippi River remained uninterrupted.\nDry conditions and high daytime temperatures have resulted in some crop stress in parts of the District, but conditions overall continued to be good for cotton and citrus crops. Cotton plantings have increased on a year-over-year basis.\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 28, 2010\nOn balance, economic activity in the Fourth District held steady during the past seven weeks. Manufacturers reported that the rise in production which began late last year is leveling off. Contacts in nonresidential construction cited fewer inquiries and a small drop in backlog, while residential builders noted that new home construction has slowed. Retail sales were flat to up slightly, whereas auto dealers reported a slight downturn in new vehicle purchases. Energy production increased modestly, and reports indicated a continuing upturn in freight transport volume. Demand by businesses and consumers for new loans remained weak.\nA small pickup in employment was limited to the manufacturing sector. Staffing-firm representatives reported some improvement in the number of new job openings, with opportunities concentrated in the healthcare field. Wage pressures continue to be contained. Apart from a downward trend in steel and lumber prices, raw materials and product pricing was generally stable.\nManufacturing\nReports from District factories show that production levels were mainly steady or down slightly during the past seven weeks. Manufacturers who cited increased output attributed it to seasonal factors. Production was higher on a year-over-year basis, with many contacts citing double-digit increases. A large majority of respondents believe that demand growth seen earlier this year is tapering off, and they expect production will stabilize at current levels or show a modest decline. Most steel producers and service centers reported a slight downturn in volume, which was expected. Shipments are being driven primarily by energy-related and metal fabrication industries. Construction volume remains very weak. Although this time of year is traditionally slow for the steel industry, our contacts are not overly confident that shipments will pick up in the fourth quarter. District auto production was fairly stable in June on a month-over-month basis, while year-over-year it rose substantially for both domestic and foreign nameplates.\nLittle movement was seen in inventories, although we heard a few reports that finished durable goods inventories were beginning to rise. A majority of our contacts stated that their capacity utilization rates are below pre-recession levels, with little change during the past few weeks. Capital outlays continue at relatively low levels, and business owners are approaching spending decisions with caution. Steel producers and service center representatives reported that their prices are on the decline, reflecting a downward trend in steel production input costs. Other raw material costs have been fairly stable. Companies continue to expand payrolls and extend work hours, but at a slower pace. Wage pressures are contained.\nReal Estate\nIn general, new home sales have slowed during the past seven weeks and on a year-over-year basis. Most of our contacts cited tight credit as one of the primary factors contributing to the slowdown. Homebuilders are not expecting a turnaround in new home construction this year, with several anticipating a further decline in sales. Our contacts tell us that entry-level homes are beginning to regain sales momentum, with lessening activity in the move-up and third-time home-buyer categories. Little change was noted in the list prices of new houses, and reports indicate that the rise in construction material costs is leveling off, especially for lumber products. Skeleton crews remain the norm for general contractors and subcontractors.\nSigns of a pickup in nonresidential construction cited in our past two reports are beginning to diminish. Although building activity remains steady, several of our contacts reported declining inquiries and a slight drop in their backlogs. Most inquiries and new projects underway fall within the industrial and government-funded infrastructure categories. The glut in commercial space shows no signs of lessening. Half of our contacts expressed a heightened level of uncertainty about construction activity in the near term, though others remain cautiously optimistic. Little change in construction material costs was reported. We heard numerous accounts of contractors and clients struggling to obtain financing. Other than seasonal hiring, employment rolls are steady. Many subcontractors remain underutilized and are taking on projects at cost.\nConsumer Spending\nFor the period from mid-May through mid-June, retail sales were generally flat or up slightly when compared to the previous 30-day period. Purchases of apparel and food products are doing well, while spending on discretionary items has weakened. Retailers are somewhat less optimistic about future sales than in our last report; however, they still expect buying to show a small improvement going into the fourth quarter. Vendor and store pricing has been stable. Most auto dealers saw new vehicle sales slow from mid-May through mid-June, when compared with the previous 30 days. Dealers indicated that the rising sales trend present in the spring has leveled off, and they are not expecting a return to robust growth in the near term. Many dealers said that their inventories are low, which was attributed to seasonal factors. Used vehicle purchases were characterized as holding up reasonably well. Our contacts told us that they are finding it more challenging to arrange financing for customers with less than the highest credit rating. Reports show little change in staffing levels at retailers or auto dealers.\nBanking\nThe market for business lending remains soft, with bankers characterizing the demand for new loans as flat to improving slightly. Interest rates are stable. On the consumer side, loan demand is generally weak. Those seeing a slight uptick attributed it to draw-downs on home equity lines of credit. We heard a few reports of downward pressure on auto loan rates. The residential mortgage market continues at a slow pace, with several bankers noting that activity is below expectations, given current mortgage rates. Core deposits are steady or up at most banks, with much of the growth occurring in transaction accounts. Reports on credit quality were mixed. Delinquency rates declined or held stable for nearly all banks; still, several of our contacts noted that delinquencies remain above historic norms. Employment rolls and wages are stable.\nEnergy\nReports show little change in oil and natural gas output during the past seven weeks, with output expected to remain flat in the near term. Spot prices for natural gas rose slightly, while oil prices dropped. Reports on coal production have grown more positive. Export producers are experiencing increased demand for both steam and metallurgical coal, while unseasonably warm weather increased the demand for coal by electric utilities. Prices for coal were mixed but are tending to the up side. Production equipment and materials costs were generally flat. Staffing levels are steady, and little hiring is expected in the near future. Wage pressures are contained.\nTransportation\nFreight transport executives reported continuing favorable volume trends, with only moderate gains to their bottom lines. Although most of our contacts are cautiously optimistic in their outlook, they expect that the rate of volume growth experienced in the second quarter will begin to moderate. One contact noted industry-wide concern over the strength of consumer demand. Several respondents commented that they are attempting to negotiate rate increases, with some degree of success. Major capital purchases remain at or near replacement rates. However, due to aging fleets and growing demand, the need to replace equipment may grow toward year-end. Several of our contacts noted that quoted prices for tractors and trailers are rising. Current hiring is primarily for replacement only. If volume continues to build, freight executives expect to add capacity in the near term.\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 28, 2010\nBusiness activity continues to expand overall in the First District, but individual firms' gains show some choppiness. Most contacted manufacturers and advertising and consulting firms saw revenues rise in the most recent quarter on a year-over-year basis, while retail results were more mixed in May and June. Residential real estate markets continue to show positive effects of the homebuyer tax credits, but activity slowed after the April deadline. Respondents in commercial real estate were mostly downbeat based on office job forecasts, but building sales are picking up, in some cases at distress prices. A few firms with rising sales are increasing their headcounts, but most are holding employment steady. Input costs for some metals, oil- and food-related products have risen, but sales prices are mostly stable.\nRetail\nFirst District retailers report mixed sales results for May and June; year-over-year same-store sales figures range from down close to 3 percent to increases of about 3 percent. The majority of contacts express concern over consumer confidence, and even those retailers reporting sales increases voice a cautious outlook.\nInventory levels are mixed, with some increases due to softening sales; on the other hand, decreased ocean freight capacity is raising concerns regarding firms' ability to restock in a cost-effective and timely manner. Capital spending is also mixed, with some retailers spending on new store openings, remodels, and IT systems, while others remain cautious. Headcounts are growing modestly, with most increases attributed to opportunistic hiring and new store growth, but a few contacts indicate that staff cutbacks may occur in the future. Retailers note cost increases for cotton and food-related commodities.\nManufacturing and Related Services\nMany manufacturing firms are still finalizing their second quarter results, but the vast majority of those contacted report optimism about demand. The specific sales reports range from \"extraordinary demand\" at a semiconductor firm to less-than-anticipated demand at two firms making life science equipment and medical devices. In particular, the semiconductor firm reports sales in the second quarter were 17 percent above their pre-recession peak. Other semiconductor-related firms also report relatively strong sales. In addition, second quarter results appear to be somewhat better than expected at a business services company as well as a company whose sales of outdoor-related products benefited from the warmer-than-average temperatures. By contrast, among firms reporting weaker-than-expected sales growth, one speculated that it was due to a slowdown in European demand and the other to state and local budgetary cutbacks on medical equipment. In general, nearly all of the manufacturers surveyed feel that demand will continue to improve gradually in the second half of the year as well as in 2011.\nMost contacted manufacturing firms continue to report limited price pressure. Input costs remain relatively stable. One manufacturer who uses many raw metals in the production process says that prices remain higher than a year ago, but have come down somewhat since the first quarter. A couple of firms who use oil-related products also report somewhat higher input prices. Selling prices are generally fairly stable. One manufacturer that implemented a moderate (3 percent) price increase in the first quarter says that the increase held. By contrast, a firm that makes both capital equipment and consumables cites downward price pressure on the capital goods they sell (as companies remain wary about the costs of large items), but not on the consumables; this has been the case for about a year.\nEmployment continues to be steady at nearly all responding manufacturing firms, and most say they are unlikely to expand headcount substantially in the near term. A number of firms plan to hire to support new product lines or in divisions that are experiencing robust growth. A semiconductor-related firm, in particular, plans to increase its engineering workforce by about 150 by year-end; that firm's employment is already above its pre-recession peak due to strong demand.\nManufacturers once again report that their planned 2010 capital expenditures are in line with or somewhat higher than their expenditures in 2009. Planned increases are primarily for new product releases and/or infrastructure and IT-related improvements. Credit supply remains adequate for firm investment, and many manufacturers also report having adequate cash on hand for investment purposes.\nOverall, contacted manufacturers are generally optimistic about the second half of 2010 and 2011. The firms remain cautious, however, as uncertainty continues to surround the domestic and foreign demand environments.\nSelected Business Services\nConsulting and advertising contacts in the First District generally report increased demand for their services in the second quarter of 2010, although a few say demand is flat. Among those seeing increases, revenue rose 8 percent to 25 percent year-over-year. Contacts cite healthcare and private equity industries as markets in which activity increased; a consulting firm also notes a significant increase in demand from the U.S. government regarding international development and healthcare issues. One contact reports that the payment cycle from its clients lengthened in the second quarter, slowing revenue growth.\nConsulting and marketing firms indicate that business costs are stable and they are also generally holding their list prices steady, although some firms have been able to remove the price concessions they made in 2009. Several companies mention that they are replacing their laptops and purchasing new software licenses. Employment is mostly steady, with firms simply making replacement hires or modestly increasing the number of employees; more hires are expected in the second half of the year. Wages are either stable or rising slightly, by 2 percent to 5 percent.\nAdvertising and consulting contacts are optimistic about their firms' performance in the second half of the year, primarily based on the increasing volume of sales and the improving economic situation. However, many respondents see downside risks to this outlook, notably the chance of a double-dip recession; firms that contract with the government also note that budget cuts in response to deficit concerns would harm their businesses.\nCommercial Real Estate\nCommercial real estate contacts give mixed reports this round. Leasing activity is flat in Hartford, where market sentiment remains subdued. Between the first and second quarters, Hartford's office vacancy rate rose by close to 2 percentage points while rents were roughly flat. Industrial vacancy in Hartford also rose over the quarter, but by less than a percentage point, and industrial rents were flat. Hartford's investment sales market remains largely dormant. The word from Providence is more upbeat, as leasing activity remained solid in recent weeks and rents have reportedly stabilized. Business sentiment in Providence is described as more optimistic and less uncertain than it was earlier in the year. Absorption was roughly zero across Rhode Island. Office-building sales in Rhode Island remain scarce, but the industrial sales market saw some significant transactions. In Boston, one contact remains largely negative about current market conditions and near-term prospects, emphasizing slow job growth and the high office vacancy rate--currently around 20 percent in greater Boston. Leasing velocity is described as either steady or up slightly, but tenants retain very strong bargaining power on rents and improvements. Contacts say investors are bidding aggressively for fully leased, high-quality properties in greater Boston, especially apartment buildings; at the same time, some investors are purchasing distressed properties (with high vacancy rates) in the suburban corridor at steep discounts and betting on a solid recovery.\nWith regard to commercial real estate debt markets, one noteworthy development is that special servicers (who manage CMBS issues) are reportedly starting to dispose of an increasing number of securitized mortgages in default rather than continuing to extend troubled loans. This trend is expected to accelerate over the next 6 to 12 months. At the same time, banks continue to hold large sums of distressed commercial real estate debt and have not yet initiated large numbers of foreclosures. Contacts across the region remain concerned about the potential impact of inevitable foreclosures, especially if a large number occur in a compressed time period; contacts say, however, that New England is likely to fare relatively well compared to other regions with respect to commercial foreclosures.\nIn Hartford, expectations for market turnaround were pushed back a quarter, out to late 2010. In Boston, contacts expect net absorption to remain slow, and predict that office rents still have further to fall, but were uncertain as to whether job growth (and related demand for commercial space) would continue at current levels or become weaker in the second half of 2010. The outlook for Providence is cautiously optimistic, but \"optimistic\" was defined as slow growth rather than further deterioration.\nResidential Real Estate\nResidential real estate markets in New England continue to experience large year-over-year sales increases in May and into June. Median home prices also increased modestly year-over-year in May, although median condo prices were somewhat mixed. While April 30 was the deadline to sign a \"binding sales contract\" in order to be eligible for the homebuyer tax credits, buyers are allowed to close these deals as late as September 30 (extended from June 30). The strong sales numbers of May and June thus reflect closings on pre-April 30 contracts spurred by the tax credits. Respondents report that activity has slowed considerably since the expiration of the tax credit. Sales numbers will soften over the next couple of months as a result of this slowdown, although respondents are uncertain whether sales will show year-over-year declines. Pending sales of homes and condos in Massachusetts dropped 16 percent and 21 percent year-over-year in June, respectively.\nA New Hampshire contact says that some types of homes are still selling well, notably those in convenient locations near major highways. Meanwhile, prices in rural New Hampshire are \"plummeting.\" In addition, high-end vacation homes are starting to move again after very low activity during 2008 and 2009. A Boston-area contact believes that pent-up demand among potential buyers (because inventory was low) will help moderate the size of the slowdown associated with the expiration of the tax credit.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Chicago

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"Beige Book Report: Chicago\nJuly 28, 2010\nEconomic activity in the Seventh District continued to improve in June and early July, but the rate of improvement slowed further. Most contacts remained cautiously optimistic. However, increased uncertainty about the path of the economic recovery negatively affected business and consumer confidence and spending. Growth in manufacturing production eased and orders softened. Construction decreased apart from public infrastructure. Consumer and business spending increased at a slower rate. Credit conditions were slightly improved, and price and wage pressures were small on balance. Crop conditions deteriorated modestly.\nConsumer Spending\nConsumer spending increased at a slower rate in June and early July. Retail sales excluding autos edged up. While spending on food and other necessities rose, spending on home-related and luxury items decreased. Retailers reported maintaining relatively low inventories amid dampened optimism for the back-to-school shopping season. The pace of tourism activity also slowed with hotel occupancy increasing at a reduced rate. Auto sales were lower in June, but auto dealers reported showroom traffic picked up in early July in part supported by increased incentives. In addition, several dealers indicated inventories were lower than desired.\nBusiness Spending\nThe rise in business spending moderated further in June and early July. Inventory investment continued to slow in manufacturing, and contacts in retail trade indicated a slower rate of inventory investment for higher priced goods. However, capital spending on equipment and information technology continued to steadily grow. Labor market conditions continued to gradually improve, although the pace of hiring decreased. Contacts noted more caution in hiring primarily due to an increasingly uncertain outlook for the second half of 2010. For example, while temporary hiring continued to increase, it did so at a slower rate. In contrast, a large staffing firm noted billable hours from the industrial sector remained strong and had accelerated for the information technology sector. Moreover, employment and hours worked continued to expand in manufacturing.\nConstruction and Real Estate\nConstruction activity decreased from the previous reporting period. Residential building was minimal as builders were not introducing new inventory without a signed contract on a home. Sales decreased after the end of the homebuyer tax credit, but showroom traffic and contracts were up slightly in recent weeks. New mortgage applications were down, but the decline was partly offset by an increase in refinance activity as mortgage rates moved lower. Elevated vacancy rates and downward pressure on commercial rents continued to restrain private nonresidential construction. In contrast, public construction increased at a faster rate as infrastructure construction picked up.\nManufacturing\nGrowth in manufacturing production slowed from the previous reporting period. Orders softened over the course of June and into early July as inventory replenishment decreased. However, contacts remained cautiously optimistic, stressing the seasonal nature of the slowdown. Steel production decreased, and capacity utilization edged lower. A contact indicated that service centers were being cautious with new orders despite the low level of inventories due to declining steel prices and a more uncertain outlook for economic activity. Manufacturers of industrial metals also noted a retraction in activity. Housing and construction-related manufacturers continued to report weak business conditions. Nonetheless, a contact in the household appliance industry indicated that the need to rebuild inventories was likely to boost production in coming months. In addition, automakers reported that sales through the first half of July were above expectations, and automotive suppliers continued to note strength in demand for their products. Demand for heavy equipment also increased, both domestically and abroad. Exporters, in general, cited positive business conditions, but several contacts expressed concern about a potential slowdown in China and European markets.\nBanking and Finance\nCredit conditions were slightly improved in June and early July. Credit spreads narrowed for a number of District firms, and overall borrowing costs decreased. Business loan demand continued to gradually increase, driven mostly by refinancing and acquisition activity. Several banking contacts noted that fierce competition for high quality borrowers was leading to greater flexibility in pricing and terms on business loans. Consumer lending conditions were largely unchanged. However, a contact noted that the gradual reemergence of private mortgage insurance companies was beginning to improve the availability of mortgage credit. In contrast, credit remained limited for commercial real estate. Bank loan quality continued to improve gradually, although a contact indicated that the pace of improvement had slowed in recent weeks.\nPrices and Costs\nPrice and wage pressures, on balance, continued to be small in June and early July. Contacts noted increases in the price of energy, paper, plastics, and resins, while prices for industrial metals like steel, aluminum, nickel, and zinc declined. Similar to the previous reporting period, wage pressures increased only modestly. Pass-through of cost pressures to downstream prices remained minimal, with pricing power in most industries continuing to be weak.\nAgriculture\nCrop conditions varied across the District, deteriorating modestly in June and early July. Excess precipitation in some areas reduced hay output, damaged corn and soybean plants, and forced replanting. However, contacts continued to expect good corn and soybean yields this fall. In the recent period, smaller than expected stocks of corn and soybeans led to crop price increases amidst concerns about how much rationing will occur before the harvest. Hog and cattle prices remained above year ago levels, although they declined during the reporting period. In addition, milk prices increased, aiding the struggling dairy sector. Problems with disease and the need for extra fertilizer pushed up input costs, but crop farmers should be able to cover their production costs for this year. The cost of refinancing debt also put pressure on margins for many livestock operations.\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 9, 2010\nThe Twelfth District economy posted further modest improvement during the reporting period of early April through the end of May. Despite rising prices for some non-oil commodities, price increases for final goods and services remained restrained, and upward wage pressures were largely absent. Demand for retail items and services continued to strengthen, but sales remain well below pre-recession levels. Manufacturing activity in the District continued to firm, with additional improvement noted in sectors such as wood products and metal fabrication, which have been among those most troubled. Agricultural producers reported solid sales, while demand was mixed for providers of natural resource products. Demand for housing appeared to hold largely steady, but conditions in commercial real estate weakened further. Banking contacts reported stable to slightly increased lending activity.\nWages and Prices\nUpward price pressures remained limited on net during the reporting period. While the price of oil came down in recent weeks, the prices of other selected commodities, such as steel, copper, and concrete, rose. Additionally, contacts continued to report price increases for transportation services. Given the weak overall level of demand, however, the final prices for a wide variety of retail items and services continued to be held down.\nUpward wage pressures were largely absent, although reports continued to point to notable increases in employee benefit costs. Compensation gains remained constrained by high unemployment and limited hiring throughout the District. Compared to the same period a year ago, the majority of respondents expect wages to remain largely stable or rise slightly in the second half of 2010, while they anticipate that benefit costs, especially for health insurance, will increase more significantly.\nRetail Trade and Services\nRetail sales remained somewhat lackluster on net but continued to improve modestly. Both traditional department stores and discount chains reported additional increases in sales, and although consumers remained focused on necessities, contacts noted further increases in demand for some nonessential items and higher-priced options. Sales remained strong for grocers and continued to improve for sellers of furniture and household appliances. Similarly, retailers of home remodeling supplies and equipment saw robust levels of activity. Sales of new automobiles improved a bit further during the reporting period, although contacts cautioned that demand has slipped somewhat in recent weeks.\nDemand for services showed further signs of improvement but remained weak overall. Providers of health-care services reported relatively steady levels of activity, while energy utilities reported increased demand from households and from firms in selected industries, such as technology and wood products. Similarly, restaurants and other food-service firms noted continued modest increases in demand. Sales remained sluggish for providers of professional and media services. Conditions continued to improve in the tourism and leisure sector: Contacts in many of the District's major markets reported increases in visitor volumes and hotel occupancy rates, and, notably, reports pointed to positive developments in business travel and convention activity.\nManufacturing\nDistrict manufacturing activity picked up further on balance during the reporting period of early April through the end of May. Conditions continued to improve for manufacturers of semiconductors and other information technology products, with balanced inventories and high levels of capacity utilization noted. An extensive order backlog generally held production rates at a steady pace for makers of commercial aircraft and parts, although new orders continued to be limited. Capacity utilization remained at very low levels for companies in the metal fabrication and wood product sectors, but further modest improvement in demand was reported. Food manufacturers witnessed continued growth in new orders and sales with high levels of capacity utilization.\nAgriculture and Resource-related Industries\nDemand stayed solid for agricultural producers but was mixed for extractors of natural resources used for energy production. Sales held largely steady for a variety of crop and livestock products, and reports from agricultural contacts indicated little change in input costs. Oil extraction activity decreased somewhat in recent weeks as the price of oil declined. Meanwhile, despite high levels of inventory, extraction of natural gas increased modestly as demand showed signs of firming.\nReal Estate and Construction\nDemand for housing in the District appeared to be little changed from the previous period, while demand for commercial real estate deteriorated a bit further. Home prices continued to edge up in some parts of the District, and although the pace of home sales remained mixed across areas, it appeared largely stable on net. However, contacts continued to note that the limited availability of nonconforming \"jumbo\" loans has restricted sales of higher-priced homes in some areas. Scattered reports pointed to some modest improvements in residential construction, most notably in the repair and remodel sector. Conditions worsened somewhat further in commercial real estate markets, with vacancy rates for office and industrial space edging up in many parts of the District. However, contacts reported continued improvements in leasing activity for some market segments of the District as tenants seek to secure favorable terms.\nFinancial Institutions\nReports from District banking contacts indicated that loan demand was largely stable or slightly up compared with previous reporting periods. Businesses' cautious attitudes towards capital spending continued to restrain commercial and industrial loan volumes; however, reports indicated a pickup in loan demand coming from selected businesses that are planning to replace worn or outdated equipment and software. Demand for consumer loans remained weak on net. Lending standards continued to be relatively restrictive for consumer and business lending, although reports suggested that credit quality may be stabilizing. Going forward, continued modest improvement in commercial and industrial loan demand seems likely; overall, respondents expect capital spending in equipment and software to increase further in the second half of 2010, although capital spending in structures is anticipated to remain lackluster.\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 9, 2010\nPrepared at the Federal Reserve Bank of Chicago and based on information collected on or before May 28, 2010. 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.\nEconomic activity continued to improve since the last report across all twelve Federal Reserve Districts, although many Districts described the pace of growth as \"modest.\" Consumer spending and tourism activity generally increased. Business spending also rose, on net, with employment and capital spending edging up but inventory investment slowing. By sector, nonfinancial services, manufacturing, and transportation continued to gradually improve. Residential real estate activity in many Districts was buoyed by the April deadline for the homebuyer tax credit. Commercial real estate remained weak, although some Districts reported an increase in leasing. Financial activity was little changed on balance, although a few Districts noted a modest increase in lending. Spring planting was generally ahead of the normal pace, while conditions in the natural resource sectors varied across the Districts. Prices of final goods and services were largely stable as higher input costs were not being passed along to customers and wage pressures continued to be minimal.\nConsumer Spending and Tourism\nConsumer spending improved from the previous report. Spending continued to be concentrated in necessities as opposed to discretionary big-ticket items. Retail sales increased in April and May, although several Districts noted that the gains were uneven across months. Sales of spring and summer apparel were strong in the Boston, New York, Philadelphia, St. Louis, Kansas City, and Dallas Districts. Sales of home improvement and lawn and garden equipment were reported to have strengthened in the Richmond, Chicago, and San Francisco Districts. Modest improvement in sales of discretionary home goods was noted by Cleveland, Kansas City, and San Francisco. Vehicle sales also rose, but the rate of increase reportedly slowed in May in the New York, Cleveland, and San Francisco Districts. Tourism activity improved. Dallas reported a continued increase in leisure air travel. Hotel occupancy rates rose in the New York, Atlanta, Chicago, Kansas City, and San Francisco Districts, and convention activity increased in Atlanta and San Francisco. Richmond reported resort bookings for the Memorial Day holiday weekend were stronger than last year, and Atlanta indicated cruise-line bookings were up slightly. Atlanta also reported, however, that the Gulf oil spill and Tennessee floods had already resulted in some vacation lodging cancellations. The potential exists for a much greater impact, although contacts are quite uncertain as to the ultimate effects.\nBusiness Spending\nBusiness spending increased moderately from the previous report. Cleveland, Chicago and Dallas noted that growth in manufacturers' inventories was leveling off, while Boston, Atlanta, and St. Louis reported the same for retailers' inventories. In contrast, several Districts reported that auto production was failing to keep up with demand, pressuring already lean auto dealer stocks. Capital spending was slightly higher in a number of Districts, although several indicated that continuing caution on the part of firms and tight credit availability were limiting expenditures. The manufacturing, transportation, and energy industries accounted for most of the increase in spending on plant and equipment. Boston reported that spending on information technology services increased.\nNonfinancial Services\nNonfinancial service activity was slightly improved, on balance, from the previous report. Several Districts highlighted some strength in demand for professional technical services, such as software and information technology, engineering, and other scientific trades. In contrast, sluggishness remained in accounting, legal, marketing, media, and construction services. Demand for business support services was more mixed. Philadelphia and Chicago reported slightly higher demand while Boston and St. Louis noted that demand remained weak. St. Louis also indicated that budget cuts had led to reduced government and education services.\nManufacturing and Transportation\nManufacturing and transportation activity continued to gradually improve across all twelve Districts. Most Districts reported further increases in factory production, shipments, and new orders, although Philadelphia and Chicago noted that the pace of gains had slowed in May. Steel producers and metals manufacturers reported moderately higher production in Cleveland, Chicago, St. Louis, and Dallas, although Chicago indicated capacity utilization leveled off in May. Auto and parts production increased in the Cleveland, Richmond, and Chicago Districts. Oil refinery capacity utilization was up in the Dallas District. Higher residential construction increased demand for construction equipment and materials in the Philadelphia, Richmond, Chicago, Dallas, and San Francisco Districts. Chicago also noted that demand from Asia and South America for heavy equipment continued to be robust. The output of medical equipment and pharmaceuticals remained strong in Boston and Chicago, as did high-tech manufacturing in Boston, St. Louis, Kansas City, and San Francisco. Food processing increased in Dallas and San Francisco. Trucking and rail activity increased, with freight traffic and raw material shipments on the rise in Cleveland, Atlanta, and Dallas.\nReal Estate and Construction\nResidential real estate activity improved since the last report. Most Districts noted an increase in home sales and construction prior to the April 30th deadline for the homebuyer tax credit, with contacts in many of these Districts also indicating a corresponding slowing in activity in May. Tight credit, the elevated inventory of homes available for sale, and the \"shadow inventory\" of foreclosed properties on banks' balance sheets held back residential development in the New York, Cleveland, Atlanta, and Chicago Districts. Commercial real estate activity generally remained weak. Office, industrial, and retail vacancy rates continued to drift upward in many Districts putting downward pressure on rents. However, lower rents were said to have led to an increase in leasing activity in New York, Philadelphia, Richmond, Kansas City, Dallas, and San Francisco. The elevated inventory of existing properties for sale or rent continued to weigh on new private nonresidential construction. However, stronger industrial demand was noted in several Districts. Public construction increased in Philadelphia, Cleveland, and Chicago, but slowed in Minneapolis.\nBanking and Finance\nFinancial activity was little changed on balance from the previous report. Commercial and industrial lending by banks remained weak in most Districts, although Philadelphia, Chicago, Dallas, and San Francisco noted business loan demand was firming. Philadelphia also indicated an increase in business lending by non-depository financial companies, and New York reported that underwriting and investment banking activity strengthened. Consumer lending weakened in most Districts. In contrast, real estate lending increased even though standards on these loans remained tighter than on other loans, particularly for commercial mortgages. Chicago noted that the secondary market for residential mortgages was beginning to improve, and private equity investment in commercial properties increased in Boston, Chicago, and Dallas. Loan quality was indicated to be stabilizing or gradually improving in most Districts, but remained an issue for banks with large exposures to real estate. Contacts in some Districts cited concerns over the potential impact of the European fiscal crisis on financial and business conditions, and reported a corresponding increase in uncertainty and financial market volatility.\nAgriculture and Natural Resources\nCrop planting was generally ahead of the seasonal norm, particularly in the Chicago, Minneapolis, and Dallas Districts, although soybean planting was lagging in St. Louis and Kansas City. Crop emergence was also ahead of the typical pace. Precipitation conditions were generally positive, with the exception of flooding in Tennessee and dryness in parts of the Richmond and Dallas Districts. Prices for hogs, cattle, and cotton were higher, while prices for grains, soybeans, and milk were roughly unchanged. Mining and energy industry activity varied across Districts. According to contacts in the Atlanta District, the Gulf oil spill had little immediate effect on oil production, although it had damaged fishing operations.\nEmployment, Wages, and Prices\nLabor market conditions improved slightly with permanent employment levels edging up in most Districts. In addition, many Districts again noted an increase in temporary hires, with Boston and Dallas also indicating a pick up in temporary-to-permanent transitions. By industry, manufacturing was the most often cited source of employment gains (both temporary and permanent), and Cleveland, Minneapolis, and Dallas noted an increase in the manufacturing workweek. Other sources of increased employment were the biopharmaceutical industry in Boston, retail trade in Chicago, and transportation in Dallas.\nWage pressures were limited, although San Francisco noted upward pressure on employee benefit costs. Prices of final goods and services were largely unchanged in most Districts as higher input costs were not being passed along to customers and wage pressures continued to be minimal. Steel prices in many Districts moved higher, as did lumber and food prices, while energy prices generally declined. Several Districts noted tighter commodity supply conditions, with Richmond and Kansas City indicating an increase in supplier lead times and Boston and Atlanta reporting supply chain capacity constraints. Transportation costs moved up in the Philadelphia, Richmond, Atlanta, and San Francisco Districts, but diesel fuel cost pressures eased in New York.\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 9, 2010\nOn balance, Sixth District business conditions appear to have improved modestly in April and May. Most retail contacts continued to experience increased traffic and sales, and their outlook remained generally optimistic. Reports on tourism were also generally positive; however, considerable uncertainty was expressed about the potential impact from the Gulf oil spill and the recent floods in Tennessee. Overall, homebuilder and Realtor reports suggested that the pace of new and existing home sales slowed somewhat, whereas commercial construction contacts reported ongoing weak conditions. The District's manufacturing and transportation segments extended their previous gains in new orders and production. By most accounts, bank credit conditions remained tight. Firms across several sectors reported increasing hours worked of existing staff and expanded the utilization of temporary hires. However, firms generally remained reluctant to add permanent staff. According to manufacturers and homebuilders, transportation and material costs rose slightly, but they did not plan to pass these increases along to customers.\nConsumer Spending and Tourism\nMost retail merchants reported continued improvement in traffic and sales, and a slight increase in confidence among consumers in April and May. Despite the uptick in sales, retailers continued to keep their inventory levels relatively low, preferring instead to have more inventories held at the wholesale level. The outlook among retail contacts was positive with the majority expecting continued sales growth over the next couple of months. Vehicle sales increased from weak year-ago levels, with foreign brands experiencing the strongest demand.\nThe tourism sector continued to improve. Hospitality contacts in Atlanta, Miami, Nashville, New Orleans, Orlando, and Tampa all noted hotel occupancy rates above the national average. Business-related travel and convention bookings were up and future bookings looked strong. Convention hotel contacts began noting some pricing power. Cruise-line bookings were gradually trending up and many were able to increase prices slightly. Similarly, contacts in the restaurant industry experienced a modest increase in activity and projections for the near-term were optimistic.\nHowever, the recent Gulf oil spill and the floods in Tennessee have tempered the outlook in those areas. Contacts indicated that the potential impact on the tourism industry along the coastline of Louisiana, Mississippi, Alabama and western Florida could be substantial. In some cases, vacation lodging cancellations have been replaced by bookings from clean-up crews, laborers, and the National Guard. The Nashville area is expected to see a decline in tourism-related receipts because of damage to several tourist venues there. The near-term outlook among hospitality contacts varied greatly, reflecting the high level of uncertainty.\nReal Estate and Construction\nDistrict homebuilders reported that new home sales growth softened, but remained positive on a year-over-year basis. Most of the weaker reports came from contacts in Florida who noted a relatively sharp slowing in sales growth. The pace of construction activity weakened as well and was described as being roughly even with a year earlier. Most homebuilders commented that tax incentives had been a major driver of sales in most markets, although access to financing remained a significant challenge. The outlook among residential builder contacts weakened from the previous report but remained slightly positive overall.\nRealtors indicated another modest improvement in existing home sales in April compared with a year earlier. However, on a month-over-month basis, responses from contacts showed that sales softened slightly. Realtors reported that high-end home sales exceeded their year-earlier level for the first time since early 2006. Inventory levels were described as similar to a year earlier, and home prices stabilized. The outlook for sales over the next several months remained positive but was a little less upbeat than recent reports.\nThe majority of commercial contacts reported that the pace of development was still well below year-earlier levels and construction backlogs were down sharply. Most noted that limited access to financing and weak demand continued to constrain activity. The outlook for commercial construction activity for the rest of the year remained weak.\nManufacturing and Transportation\nA majority of District manufacturers noted increased levels of new orders and production in April compared with March. Most firms also reported plans to expand production levels in the short-term. Freight demand continued to improve from weak year-ago levels. Trucking contacts in the District noted an increase in business. However, they were uncertain whether the improvements reflected reduced capacity in the transportation industry or an overall increase in demand. Regional rail shipments were up notably for automotive, chemical, and other raw industrial materials.\nBanking and Finance\nBanking contacts reported that credit standards remained stringent but that credit was readily available for borrowers that met the stricter requirements. Bankers also cited increasing foreclosure rates, bankruptcies, and loan delinquencies in several markets.\nEmployment and Prices\nAlthough overall payroll employment levels appear to have increased across much of the District, many businesses still reported that they had a strong preference for increasing the hours for existing staff and using temporary staff rather than hiring fulltime employees.\nDistrict manufacturing and homebuilder contacts cited increases in commodity prices and transportation costs in April and early May. Several businesses reported that supply chain capacity constraints were responsible for some of the price increases. However, little of these cost increases were expected to be passed on to consumers as lower labor costs continued to relieve pressure on business balance sheets, and most firms said they faced intense competitive pressures.\nNatural Resources and Agriculture\nLate April's large oil spill in the Gulf of Mexico has had little immediate impact on District oil production. However, industry contacts expressed concern about the potential impact on future production if stricter regulations restrict drilling activity. Following the spill, supply vessels were able to reach existing rigs without interruption, and refinery operations were not disrupted significantly. Gulf Coast crude oil and gasoline stocks remained near the top of their seasonal average for this time of year. The regional fishing industry reported a significant reduction in activity, as fears of water contamination and safety concerns prompting bans on both commercial and recreational fishing in zones affected by the spill.\nIn early May, severe rainfall flooded parts of central Tennessee. According to the USDA National Agricultural Statistics Service's weekly crop survey, Tennessee farmers reported moderate to severe damages to 39 percent of the state's corn crop and 21 percent of winter wheat. Damages to fruit and vegetable crops and nursery stock have also been reported, as well as significant destruction of farm infrastructure. Elsewhere in the District, recent rains generally improved soil moisture conditions and crop production.\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 9, 2010\nEconomic activity has advanced modestly in the Third District since the last Beige Book. Manufacturers, on balance, reported increases in shipments and new orders. Retailers posted sales increases from April to May. Motor vehicle dealers also indicated that sales increased. Third District banks reported mostly steady loan volume outstanding. Residential real estate agents and homebuilders said home sales increased from March to April but slowed in May. Contacts in the commercial real estate sector said leasing has picked up, but vacancy rates have not improved, and construction activity continued to be weak. Service-sector companies generally reported slight gains in activity. Business firms in the region indicated that prices of most goods and services have been steady, although there were increased reports of rising prices for basic materials, construction-related products, and shipping.\nThe outlook among Third District business contacts is positive but cautious, overall. Manufacturers forecast a rise in shipments and orders during the next six months, on balance. Retailers expect sales to expand modestly as long as overall economic conditions and the employment situation improve. Auto dealers expect the sales rate to increase somewhat in the months ahead. Bankers expect a slight increase in lending, mostly in commercial and industrial loans. Residential real estate contacts expect the pace of home sales to ease following the end of the federal tax credit for purchases. Contacts in nonresidential real estate expect leasing to increase slowly, but they do not expect any near-term gains in construction activity. Service-sector companies expect continued modest growth for the rest of the year.\nManufacturing\nThird District manufacturers reported increases in shipments and new orders in May, on balance. Compared with April, however, the number of firms recording rising orders declined somewhat, although the number of firms recording rising shipments increased. Among the major manufacturing industries in the region, increases in orders were more common for producers of lumber and wood products, industrial materials, and industrial equipment. In contrast, producers of apparel and electrical equipment reported mostly declines in orders. In general, manufacturers continued to describe the increase in demand for their products as slow. One manufacturer said, \"Conditions have improved slightly,\" and another said, \"Activity is showing signs of improving but at a slow pace.\"\nThird District manufacturers expect business conditions to improve during the next six months, on balance, and the margin of positive opinions over negative opinions has been practically unchanged since the previous Beige Book. Among the firms surveyed in May, about half expect increases in new orders and shipments; a bit over one-tenth expect decreases. Capital spending plans among area manufacturers remain positive, on balance, but not strong. About one-fourth of the firms polled in May plan to increase expenditures for new plant and equipment, but one-half plan to maintain level spending, and nearly one-fifth expect to reduce spending.\nRetail\nThird District retailers reported increased sales in May compared with April and with May of last year. They said that spring apparel sales continued to rise and that sales of other lines of merchandise had begun to move up as well. Although some merchants cautioned that much of the year-over-year improvement in sales was a consequence of last year's poor results, most said the current trend in sales was encouraging. \"It's definitely a better year than last,\" one retailer remarked, \"and we are selectively expanding.\" Looking ahead, Third District retailers expect the sales trend to remain positive as long as overall economic conditions continue to improve.\nThird District auto dealers reported a rise in sales in May compared with April and with May of last year. They said a shortage of popular models has limited the advance in sales, but they expect manufacturers to increase production soon. Dealers expect sales to continue to move up through the rest of the year.\nFinance\nTotal outstanding loan volume at most of the Third District banks contacted for this report has been virtually level since the last Beige Book. On balance, commercial bank lending officers said there has been a small increase in business lending, some gains in residential mortgage lending, but a decline in consumer lending. Bankers generally reported that demand for business loans has been rising, although some noted that use of existing credit lines by many commercial customers has been less than expected. Contacts in the Third District financial community noted recent signs of increased interest in business lending by non-depository financial companies. Most of the surveyed banks indicated that credit quality measures have shown little change since the last Beige Book, although some noted slight improvement.\nLooking ahead, Third District bankers expect modest loan growth. They generally expect gains in business lending. In contrast, several bankers said they expect a falloff in demand for residential mortgages and continued softness in consumer loan demand. \"Individuals are still deleveraging and looking to build up cash reserves,\" one banker said.\nReal Estate and Construction\nContacts in residential real estate markets reported increases in sales of new and existing homes from March to April as well as year-over-year gains for both months, but the sales pace slowed in May. The March-April results were fueled by the federal income tax credit for home purchases, according to contacts, and they expect the monthly sales rate to taper off. They expect some sales momentum for existing homes as recent homebuyers sell their current residences, but slower sales after that. Many contacts believe \"we stole sales from the future,\" as one real estate agent said. Although builders reduced inventories of built homes in the past few months, they do not expect construction activity to pick up this summer. For both new and existing homes, contacts reported little change in prices compared with a year ago.\nNonresidential real estate firms indicated that vacancy rates in commercial and industrial buildings have increased slightly in most parts of the Third District in the past few months. Leasing activity has picked up somewhat, but effective rents have been steady to down as recently completed buildings have added to the supply of available space. Construction activity has been generally flat at low levels, according to contacts, although some reported increases in road building and publicly funded projects. Contacts expect leasing activity to increase slowly in the months ahead and rents to remain about steady. \"It will not be a robust recovery,\" according to one contact whose opinion reflected the consensus. Building contractors and commercial real estate agents were in agreement that construction activity showed no signs of increasing in the near term.\nServices\nService-sector firms generally reported that activity has expanded slightly since the last Beige Book. Business services firms indicated that client companies in most industry segments have increased use of their services, with the exception of the construction industry, a sector in which a recovery has not yet occurred. Several business services firms reported increased interest in outsourced functions by companies in a range of industries as well as by state and local governments. Nearly all the services firms contacted for this report noted that the recent improvement has been slight. One contact said, \"The growth is modest, and the year-over-year comparison is easy because business was very slow last year.\" Looking ahead, most of the services firms contacted for this report expect continued modest growth for the rest of the year.\nPrices and Wages\nReports on input costs and output prices have been mixed since the last Beige Book, although there has been an increase in the number of reports of rising prices. Around 40 percent of the manufacturing firms polled in May noted increases in the costs of the commodities they use, and 50 percent reported steady input costs. Manufacturers continued to report rising costs for metals and metal products, and they also reported increased costs for lumber and chemicals. Most manufacturers said they have not raised the prices of the products they make, although some producers of lumber and wood products, metals, and electrical equipment have raised prices. Construction firms noted increases in the costs of lumber, drywall, oil-based products, and some metal products. Retailers reported mostly flat selling prices. However, they noted increases in the cost of cotton goods and international freight rates. Auto dealers said vehicle selling prices have moved up, particularly for used cars.\nBusiness firms in the region reported a slight increase in hiring, on balance, but no significant changes in wages since the last Beige Book. Several firms noted that recent increases in business activity have prompted them to consider increasing staffing levels sometime this year. Employment agencies reported strengthening demand for temporary workers and a slight increase in demand for permanent employees.\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 9, 2010\nEconomic activity in the Eighth District has increased modestly since our previous report. Manufacturing activity increased on balance, while activity in the services sector was mixed. Retail and auto sales in April and early May increased over a year ago. Residential real estate market conditions improved throughout the District, while commercial and industrial market conditions continued to lag behind. Overall lending activity at a sample of large District banks increased modestly in the first quarter of 2010 compared with the fourth quarter of 2009.\nConsumer Spending\nContacts reported that retail sales in April and early May were up, on average, over year-earlier levels. About 52 percent of the retailers saw increases in sales, while 36 percent saw decreases and 12 percent saw no changes. About 41 percent of the respondents noted that sales levels met their expectations, 32 percent reported that sales were below expectations, and 27 percent reported that sales were above expectations. Lower-priced items, apparel, and shoes were strong sellers, while higher-priced items and gifts moved more slowly. About 61 percent of the contacts noted that inventories were at desired levels, while 27 percent reported too-high inventories and 12 percent reported too-low inventories. The sales outlook among the retailers for this summer was mostly optimistic. About 73 percent of the retailers expect sales to increase over 2009 levels, while 23 percent expect sales to decrease and 4 percent expect sales to be similar to last year.\nCar dealers in the District reported that, compared with last year, sales in April and early May were up, on average. About 64 percent of the car dealers surveyed saw increases in sales, while 9 percent saw decreases and 27 percent saw no changes. About 33 percent of the car dealers noted that used car sales had increased relative to new car sales, while 29 percent reported the opposite. Also, 25 percent reported an increase in high-end vehicle sales relative to low-end vehicle sales, while 13 percent reported the opposite. About 38 percent of contacts reported more acceptances of finance applications, but 17 percent reported more rejections. About half of the car dealers surveyed reported that their inventories were too low (mostly on new vehicles), while 8 percent reported that their inventories were too high. The sales outlook among the car dealers for this summer was generally optimistic. About 67 percent of the car dealers expect sales to increase over 2009 levels, but 12 percent expect sales to decrease. The remaining 21 percent expect sales to be similar to last year.\nManufacturing and Other Business Activity\nManufacturing activity has increased since our previous report. A greater number of contacts reported new hires and plant openings than reported job layoffs and plant closings. Firms in the fabricated metal product, office supplies, plastics product, and \"hand and edge\" tool manufacturing industries reported plans to expand operations and hire new employees. A major firm in semiconductor and related device manufacturing announced a significant amount of new hires along with the opening of a new plant. Two smaller firms in primary metal manufacturing also announced plans to open a new plant in the District and expand employment. In contrast, firms in synthetic dye and pigment manufacturing and pharmaceutical and medicine manufacturing reported plans to lay off workers and decrease operations.\nThe District's services sector activity has been mixed since our previous report. A firm in business support services announced job layoffs in response to decreased demand. A major electrical utility announced layoffs at several power plants and support service facilities. Several regional government agencies and education services providers announced job cuts in response to budgets cuts. In contrast, a major firm in the telecommunications industry announced that it will lose significantly fewer employees from a recent merger than previously expected. Additionally, a firm in the rail transportation industry announced plans to make significant capital improvements to the rail network.\nReal Estate and Construction\nHome sales increased in many areas of the Eighth District. Compared with the same period in 2009, April 2010 year-to-date home sales were up 25 percent in Louisville, 19 percent in Little Rock, and 9 percent in St. Louis. Home sales declined 2 percent in Memphis over the same period. Several contacts noted, however, that part of the increase was likely the result of the expiring home buyer tax credit. Residential construction continued to improve throughout the District. April 2010 year-to-date single-family housing permits increased in nearly all District metro areas compared with the same period in 2009. Permits increased 65 percent in Memphis, 56 percent in St. Louis, 39 percent in Little Rock, and 38 percent in Louisville.\nCommercial and industrial real estate market activity continued to be slow throughout the District. Compared with the fourth quarter of 2009, first-quarter 2010 industrial vacancy rates decreased in Memphis but increased in Little Rock, Louisville, and St. Louis. During the same period, the suburban office vacancy rate increased in Little Rock, Louisville, and Memphis and remained the same in St. Louis. The downtown office vacancy rate decreased in Little Rock but increased in Louisville, Memphis, and St. Louis. Several contacts throughout the District reported that commercial and industrial construction is at a standstill and is not expected to pick up until sometime in 2011.\nBanking and Finance\nA survey of senior loan officers at a sample of District banks showed a modest increase in overall lending activity in the first quarter of 2010 relative to the fourth quarter of 2009. During this period, credit standards for commercial and industrial loans remained basically unchanged, while demand for these loans varied slightly from moderately weaker to moderately stronger. Credit standards for commercial real estate loans ranged from unchanged to tightened somewhat, while demand for these loans was moderately stronger. Credit standards for consumer loans remained basically unchanged, while demand was about the same. Credit standards for residential mortgages were unchanged, while demand for these loans ranged from about the same to moderately stronger.\nAgriculture and Natural Resources\nRecent rains throughout the District caused some fieldwork delays. Planting of corn, cotton, and rice was ahead of its 5-year average pace, while planting of soybeans and sorghum was behind normal pace in most District states. Emergence of these crops was ahead of normal in most cases. About two-thirds of the winter wheat in Illinois and Missouri and at least 90 percent in the other District states were rated in fair or better condition.\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 9, 2010\nThe Second District's economy has strengthened further since the last report, with scattered signs of improvement in the job market; manufacturers and other firms continue to face upward cost pressures, but prices at the consumer level remain relatively stable. Manufacturing-sector contacts continue to report improvement in business activity and increasingly widespread plans to increase capital spending. Auto dealers report strong sales for April but mixed results for May. Similarly, non-auto retailers generally report that sales were robust and ahead of plan since the last report, though one large chain reports that sales slowed in May. Tourism activity in New York City has strengthened further since the last report. Commercial real estate markets have generally been steady since the last report. Residential real estate markets have been steady to somewhat firmer since the last report, especially at the lower end of the market. Finally, bankers report weaker demand for consumer loans but little change in other categories; they also note some tightening in credit standards but little change in credit spreads or delinquency rates.\nConsumer Spending\nRetailers report strong sales for April but mixed results for May. Contacts at two major malls in western New York State report that sales and traffic were generally brisk in April and May, though inclement weather in early May led to a slow start to the month. One mall indicates that Canadian shoppers continue to represent a large share of customers. A major retail chain reports that business was ahead of plan in April, with same-store up more than 5 percent; however, sales reportedly weakened in the first three weeks of May and were somewhat below plan, with New York City continuing to out-perform other areas. In general, contacts report that sales of clothing, cosmetics and jewelry were relatively strong. However, sales of goods for the home were more mixed, with one contact noting a recent drop-off in sales of large appliances, which is partly attributed to the end of government rebate programs. Separately, the Conference Board reports that consumer confidence among residents of the Middle Atlantic states (NY, NJ, Pa) surged to a two-year high in April but retreated modestly in May.\nVehicle sales have reportedly slowed a bit in recent weeks. Rochester-areas auto dealers report that sales were relatively strong in April, rising by as much as 25 percent from a year ago (though spring 2009 makes a particularly low base for comparison); however, results for May have been more mixed, with some softening in demand for domestic makes. Dealers in the Buffalo area report that sales remained strong in April, rising nearly 10 percent from a year earlier, but that they cooled in May and were modestly lower than in May 2009. Auto dealers in both areas report recent improvement in both retail and wholesale credit conditions.\nTourism activity in New York City has shown further signs of strengthening in April and May. Manhattan hotels report a marked pickup in revenue in April and the first three weeks of May, reflecting both higher room rates and increased occupancy. Total revenues rose by more than the seasonal norm from the first quarter and were up roughly 10 percent from a year earlier. Similarly, Broadway theaters report that business has picked up noticeably in recent weeks, after slowing a bit in mid-April. Revenues for the first half of May were running 16 percent ahead of a year ago, partly reflecting increased attendance, but primarily due to higher ticket prices.\nConstruction and Real Estate\nHousing markets have been steady to somewhat firmer since the last report, with the gains largely attributed to the soon-to-expire home-buyer tax credit spurring demand at the lower end. Realtors across New York State report that sales activity was roughly 20 percent higher in April than a year earlier and prices were up about 8 percent on average. Similarly, Buffalo-area Realtors report that home sales were brisk in April, and that prices were up more than 10 percent from a year earlier, though conditions are reported to have cooled off dramatically in May, due to the end of the tax credit. An authority on New Jersey's housing industry also reports a moderate pickup in sales activity this quarter, particularly at the lower end of the market--again, largely attributed to the home-buyer tax credit. In other segments of northern New Jersey's market, prices are essentially flat, and price trends are not as robust as builders and developers had expected, as a large \"shadow inventory\" of existing homes is said to be weighing down the market. There is concern that conditions will weaken again in the third quarter, without the support of the home-buyer tax credit. Housing affordability remains a major issue.\nActivity in Manhattan's co-op and condo market has leveled off, following a modest pickup in the first quarter. The pace of new contract signings has retreated a bit in recent weeks, while prices have held steady at about 20-30 percent below their peak. There remains a large supply of units on the markets, though one contact notes that the inventory of competitively priced units is fairly lean. While the home-buyer tax credit has had little impact on Manhattan's high-priced market, it has reportedly had a positive effect elsewhere in New York City, where prices are considerably more moderate. Manhattan's apartment rental market has strengthened since the last report. Rents have recovered modestly, and landlords are offering less generous concessions than last year or even a few months ago. The inventory of available rental units has stabilized.\nCommercial real estate markets in and around New York City have been relatively steady since the last report. Leasing activity, which was very depressed throughout most of 2009, has picked up noticeably since the beginning of this year and is now back up to \"normal\" levels. Much of the recent pickup has come from legal firms and, to a lesser extent, from business services, media, and government agencies; in contrast, there has been a dearth of new leasing by financial firms. Still, vacancy rates continue to edge up, as businesses tend to be taking less space than they had at prior locations. Asking rents continue to drift down but appear to be bottoming; net effective rents have been stable since last summer, as landlords have gradually scaled back on concessions.\nOther Business Activity\nManufacturing firms in the District remain upbeat, noting ongoing gains in employment, new orders, shipments and general business activity; a growing proportion of respondents plans to increase capital spending in the months ahead. Contacts outside the manufacturing sector continue to describe both business conditions and employment levels as stable or rising modestly. Both manufacturers and other firms report continued widespread rises in prices paid but only modest increases in selling prices.\nA contact in the trucking industry reports that business has continued to improve moderately since the last report and that truckers are seeing some relief from lower diesel prices. There are scattered but increasing reports of driver turnover--drivers leaving for more lucrative jobs. A securities-industry contact notes that business conditions have been good, with both underwriting and investment banking activity strengthening, and contends that major layoffs are now behind us; however, firms are reportedly putting off hiring and investment, due to uncertainty about regulatory reform as well as concern about global financial conditions, particularly in Europe. Recent hiring by financial firms has largely been in the area of compliance.\nFinancial Developments\nContacts at small to medium-sized banks in the District report mixed trends in loan demand: respondents indicated decreased demand for consumer loans, increased demand for commercial mortgages, and no change for residential mortgages and commercial and industrial loans. Bankers also note increased demand for refinancing, for the first time in almost a year. Respondents indicate tightening credit standards for commercial mortgage and commercial and industrial loans but no change in standards for other types of loans. No banker reported easing credit standards for any type of loan. Bankers report an increase in spreads of loan rates over costs of funds for consumer loans and commercial and industrial loans. Spreads on residential and commercial mortgages were steady. Finally, respondents report little or no change in delinquency rates for any category.\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 9, 2010\nThe economy in the Fourth District showed further signs of strengthening during the past eight weeks. Manufacturers reported that the rise in production which began late last year continued, although orders remain below pre-recession levels. Contacts in non-residential construction noted some signs of renewed growth, while residential builders cited only a modest uptick in activity. Sales figures from auto dealers showed a moderate improvement, whereas District retailers saw their rate of sales growth slow. Energy production was mixed, and reports indicate a better-than-expected rise in freight transport volume. Demand by businesses and consumers for new loans remains weak, while some bankers commented that the lending environment is starting to grow more competitive.\nThere was a broad-based pickup in employment in the manufacturing sector, where businesses are recalling workers and increasing production hours. Staffing-firm representatives had mixed reports on the number of new job openings, with opportunities concentrated in the healthcare field. Wage pressures continue to be contained. Apart from rising prices for steel and lumber, raw materials and product pricing was generally stable.\nManufacturing\nReports from District factories generally show that production levels continued to increase during the past eight weeks and on a year-over-year basis, though by varying amounts. Some respondents attributed recent increases to seasonal factors. Most manufacturers are confident about near-term prospects and expect their sales to remain on a moderate upward trend. However, they do not expect a strong rebound to pre-recession levels this year, and a few anticipate a leveling off in new orders. Steel shipments remain on the upswing, with half of our contacts characterizing volume as better than expected. Rising volume is being driven by autos, energy, and construction equipment. Although some underlying uncertainty remains, there is a sense that the current level of business activity is sustainable, at least through the third quarter. District auto production was stable in April on a month-over-month basis, while year-over-year it rose substantially for both domestic and foreign nameplates.\nA large majority of our contacts told us that their inventories are now well balanced, reflecting increased demand. Capacity utilization rates continue to improve, with a few reports indicating that it is now moving toward historical norms. Capital outlays remain at relatively low levels, and business owners are approaching spending decisions with caution. However, the number of respondents who plan on additional spending during the second half of 2010 has increased substantially since our last report. Several steel producers and service center representatives reported that they are beginning to see signs of a leveling off in steel prices. Nonetheless, a few manufacturers are contemplating, or have already put in place, higher product prices that reflect the rise in the cost of steel. Even though new hiring is limited, we heard numerous reports of recalling laid-off workers and increasing work hours. Wage pressures are contained.\nReal Estate\nIn general, new home sales improved slightly during the past eight weeks and on a year-over-year basis. Our contacts tell us that the move-up and third-time home-buyer categories are gaining momentum, while activity by entry-level buyers is lessening. Homebuilders are not expecting a turnaround in the housing market this year, and they are concerned about the effect of foreclosures and real estate owned properties on housing inventories. Builders also reported that their current spec inventory is in line with market demand. Little change was noted in the list prices of new homes, and reports indicate an overall rise in construction material costs, especially for lumber. Skeleton crews remain the norm for general contractors and subcontractors.\nActivity in non-residential construction continues to show signs of a pickup. Inquiries have improved, and many contractors said that their backlogs are higher than year-ago levels. Most projects currently under-way fall within the industrial and government-funded infrastructure categories. The glut in retail space shows no signs of diminishing. Almost all of our contacts are fairly optimistic in their outlook for the remainder of the year. Increased costs for construction materials were limited to steel and lumber. General contractors reported a small amount of seasonal and permanent hiring. While opportunities for subcontractors are beginning to improve, many of them are still struggling and taking on projects at cost.\nConsumer Spending\nIn general, retail sales were stable or down slightly during April on a month-over-month basis and showed some improvement from year-ago levels. Although consumers continue to focus on buying necessities, retailers noted that they see a pickup in purchases of discretionary items, especially for those used in the home. Looking forward, retailers are cautiously optimistic, and most expect sales to show a slight improvement going into the third quarter. Vendor and store pricing has been relatively stable. Auto dealers saw new vehicle sales increase from mid-April through mid-May, when compared with the previous 30-day period, and on a year-over-year basis. Reported increases varied widely. Used vehicle purchases were characterized as doing well. Overall, dealers are cautiously optimistic and expect slow, steady sales growth through the summer months. Reports on vehicle inventories were mixed. Half of our contacts said they need more cars on their lots, while others noted that inventories are in line with sales. Contacts also said that buyers are finding it easier to obtain financing from banks, credit unions, and captive financing companies. Reports show little change in staffing levels at retailers or auto dealers.\nBanking\nThe market for business lending remains soft, with most bankers reporting that demand for new loans is steady to down slightly. Interest rates were stable, although a few of our respondents noted that competition is putting downward pressure on their rates. On the consumer side, most bankers characterized loan demand as weak or flat. Those seeing a slight increase attributed it to draw downs on home equity lines of credit. The residential mortgage market continues at a slow pace, with several bankers noting that activity has diminished further since the end of the home-buyer tax credit. Core deposits continued to grow at most banks, while deposit rates remain low or fell further. Reports on the credit quality of loan applicants were mixed. Delinquencies were improving almost across the board, with the only problem areas continuing to be those related to real estate. Bankers expect that current credit standards will persist for the foreseeable future. Overall employment levels are stable, although two large banks reported some workforce growth.\nEnergy\nReports show little change in oil and natural gas production during the past eight weeks, with only a modest increase expected going into the summer. Spot prices for oil and gas are trending down. We heard mixed reports on coal output. One producer attributed very strong demand for metallurgical coal to the global upswing in steel production, while long-term expectations by electric utilities for flat demand and excess capacity is putting downward pressure on coal output. Prices for coal were mixed. In general, capital expenditures by energy producers are flat to down. However, two of our contacts said that they expect to increase capital outlays during the second half of 2010. With the exception of steel pipe, production equipment and materials costs were flat. Employment was steady, and little hiring is expected in the near future. Wage pressures are contained.\nTransportation\nFreight transport executives reported favorable volume trends, with corresponding gains in their bottom lines. However, profits remain below historical norms. Several contacts noted that the increased volume was above expectations. Most freight executives characterized their outlook as optimistic. Nonetheless, there remains some underlying concern about the sustainability of the recovery and credit availability for working capital. Several of our contacts noted that they are attempting to negotiate moderate rate increases, with some degree of success. They also reported a significant rise in the cost of packaging materials and much higher quotes for tractors and trailers to be delivered in the summer, which they attributed to new engine regulations. Major capital purchases remain at low levels. However, due to aging fleets and growing demand, the need to replace equipment may grow toward year-end. Current hiring is for replacement only. If volume continues to build, freight executives expect to add capacity in the near term.\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 9, 2010\nEconomic activity in the Fifth District continued to post moderate gains across most sectors from weak levels. Manufacturing continued to be a bright spot, with contacts indicating slow-but-steady expansion across a broad range of industries. Banks and other services-providing firms, also cited improvements over the last six to eight weeks, with scattered reports of weaker activity. For example, several professional services firms reported rising revenues, but an executive at a large healthcare organization stated that demand was weaker than expected. The real estate market sent mostly positive signals. In a striking change from recent months, several contacts noted a pickup in the high end of the market. Retail sales activity was virtually unchanged in recent weeks, but auto sales improved. While several temp agencies reported improving demand, other labor market indicators were weak. Slight increases in commodity and component prices were noted by manufacturing and services firms.\nRetail\nRetail sales generally flattened in recent weeks, but there were a few reports of improvement. Department stores overall reported no change in sales, and retailers in areas with high unemployment indicated that their sales continued to be held down by jobless customers scrimping on purchases. However, a retail representative in central Virginia noted an uptick and said that people were now spending on a wider variety of goods compared to a year ago when customers were \"just buying the bare essentials.\" In addition, grocery, home improvement, and garden supply retailers reported accelerating sales. Auto dealers in West Virginia and South Carolina also reported a pick-up in sales and said that manufacturers have not been able to gear up fast enough to keep up with dealers' orders for domestic and foreign nameplates. Other big-ticket sales remained in a slump, however. Retail prices rose slightly faster since our last report.\nServices\nRevenues at services-providing firms rose more quickly than last month, although a few contacts continued to report weakness. Transportation services firms reported stronger business, and enplanements rose at District airports. Executives at trucking firms noted stronger revenues, in part from the ability to raise prices in some markets. In addition, contacts at professional, scientific, and technical services firms reported rapidly rising revenues, and call centers in North Carolina cited expanded hiring. In contrast, an executive at a large healthcare organization noted that customer demand for services was \"a little soft\" relative to plan because the flu season was not as severe as expected. Services firms related to building construction also continued to report a down market. Aside from trucking, price changes at services firms were essentially neutral over the last month, with most contacts reporting no change in recent weeks.\nManufacturing\nDistrict manufacturing activity continued to expand. Overall, manufacturers reported that shipments edged higher and new orders advanced at a solid pace, while employment grew at a slower pace. An auto parts supplier noted that orders continued to increase more quickly than expected, which resulted in rush orders for foreign and domestic materials. Similarly, another manufacturer of automotive components indicated that his company was still experiencing significant unforeseen demand from the auto sector. He also noted that his non-auto related business was finally starting to recover as well. Moreover, a number of lumber companies reported their orders had increased because their customers were rebuilding inventories. Accordingly, the increased demand resulted in a small profit for their firms for the first time since early 2007. A manufacturer of door components reported that revenues were 10-15 percent above the lows of 2009. Contacts also stated that raw material lead times had increased. Prices of raw materials increased at a slightly quicker pace than a month ago, while finished goods prices grew at a somewhat slower pace than earlier.\nFinance\nBanking activity in the District remained generally weak since our last assessment. However, several respondents stated that their lending activity over the last few months was up moderately in at least some segments of their markets. Consumer lending was described by one banker as up from earlier in the year and another banker cited increased use of credit cards. Industrial loans were little changed in recent months, as businesses kept a tight control on inventory and were cautious about investing in new equipment. Several mortgage bankers stated that applications dipped after the homebuyer tax credit expired at the end of April, but one banker noted that activity recovered in the second half of May. While some bankers saw no improvement in higher-priced home sales, several lenders reported significant improvements in that segment from extremely low levels. Credit quality was little changed, although one banker reported increases in 30-day delinquencies. Other bankers stated that, on balance, quality was improving because bad loans were being taken off their books.\nReal Estate\nResidential real estate markets across the District continued to strengthen. While most of the gains were in the low-to-mid price range, activity inched up for higher priced homes in several areas. Properties in the mid-to-upper price range sold very quickly in the D.C., area, with the best sellers in the $800k-$1.1M range. The inventory of unsold homes there was at its lowest level in eighteen months. Several agents reported getting multiple offers on properties. Concern that interest rates would rise once the homebuyer tax credit expired had pushed some people to purchase homes. House prices held steady across much of the District, but they increased somewhat over the last 30 days in Fredericksburg, Va., where a shortage of inventory and multiple contracts were noted.\nCommercial real estate agents reported modest improvements since our last report.\nFor example, vacancy rates for office space in Columbia, S.C., and Charlotte, N.C., markets decreased due to positive absorption, but were stable in Richmond. Leasing activity eased in Charlotte and demand was unchanged at a weak level. A slight pick-up in retail leasing was reported in Richmond. Rental rates remained stable in most sectors. New construction remained generally nonexistent. However, a construction contractor reported starting a 100-percent speculative office building in a suburban area and indicated he would like to start a second one in the near future. He felt confident that the new buildings would attract tenants shying away from more urban locations.\nTourism\nTourist activity along the coast was either unchanged or up slightly from a year ago, and mountain resorts reported generally improving conditions. Contacts on the Outer Banks of North Carolina and in Virginia Beach said that bookings over the Memorial Day weekend were somewhat stronger when compared to earlier expectations. One contact from the Outer Banks noted that attitudes were definitely improving. Tourists were starting to eat out more and attending ticketed events again. While an analyst in Myrtle Beach indicated that increased promotion was attracting more visitors, spending levels continued to be quite low. Managers at mountain resorts reported that holiday bookings were somewhat stronger than last year. They attributed the increase in reservations to people staying closer to home, which allowed tourists to spend more at restaurants and events.\nLabor Markets\nFifth District labor markets remained soft, but temporary employment agents cited recent gains. While several services firms reported that hiring was picking up, job cuts continued at many retail establishments. No change in the number of employees was noted in most manufacturing industries, but several contacts reported cuts in weekly production hours. A Raleigh contact at a temp agency reported seeing a steady increase in demand for his clients, specifically in office support positions where demand had been lagging in previous periods. One respondent stated that temp employment among District auto- and metals-related manufacturers improved recently. Most temp agency contacts expected the demand for workers to continue to improve, citing a recovering economy and higher manufacturing orders. Wage growth picked up in retail and services businesses, but one executive said that manufacturing wages had not increased since 2007 and he did not expect them to change this year.\nAgriculture\nRainfall brought much needed relief and improved soil moisture to most areas of the District, which helped revive pastures and field crops. However, dry conditions and inconsistent weather took a toll on crops and yield potential in other areas. For example, farmers expected low rainfall to reduce winter wheat harvests in South Carolina. An analyst in Virginia reported some fruit and vegetable damage due to near frost-level temperatures. Also farmers expected lower yields of hay because sporadic rainfall hampered production and curing. In Maryland, however, hay supplies remained adequate and pasture conditions were rated fair to good. In North and South Carolina, plantings of peanuts and soybeans were well on their way, and farmers in Virginia were busy planting sweet corn, cantaloupes, peppers and squash. The 2010 peach harvest has just begun in South Carolina and conditions are favorable for peach growers. Lastly, peach and apple conditions in West Virginia ranged from fair to excellent, with most orchards in good condition.\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 9, 2010\nEconomic activity in the Seventh District continued to improve, but the rate of improvement slowed from April to May. Manufacturing continued to lead the way, and consumer and business spending also increased further. Construction activity improved slightly on the basis of increases in residential and public building. However, the gains in all of these sectors in May were somewhat slower than in April. Price pressures remained limited. Crop conditions were slightly better than normal for this time of year.\nConsumer Spending\nConsumer spending increased in April and May. Though contacts noted smaller gains than during the previous reporting period, they attributed most of the slowdown to the early Easter holiday drawing sales into March. Noticeable increases were seen in the home improvement and lawn and garden categories as consumers prepared for summer. Auto sales also continued to rise as buyers returned to showrooms to take advantage of favorable price and credit terms. In addition, the pace of tourism activity increased with warmer weather and lower hotel rates boosting demand. Retail contacts indicated that recent increases in income should translate into higher sales with the momentum carrying forward into the fall season.\nBusiness Spending\nThe rise in business spending moderated from the previous reporting period. Inventory investment slowed. Contacts expect that manufacturers' will do only marginal restocking in the remainder of 2010, while retailers will rebuild inventories at least through fall. Labor market conditions improved. Contacts noted increasing signs that employment gains could be stronger in the second half of 2010. For example, they are seeing more job advertisements in categories associated with companies that are expanding employment. By sector, manufacturers continued to hire to fill skill-based needs and make use of previously idle capacity; and a large staffing firm reported billable hours rose in large part due to increasingly higher demand for industrial workers. Labor demand in professional and business services and retail trade also increased. Unemployment in the District remained above the national rate, with the average duration increasing. However, a contact noted that recently unemployed workers were re-entering the labor force more quickly than the previously unemployed.\nConstruction and Real estate\nConstruction activity improved slightly from the previous reporting period. Residential building benefitted to some degree from the homebuyer tax credit that expired in April, but contacts noted that activity pulled back in May. They expect construction in 2010 as a whole to be just slightly better than in 2009. New residential development remained minimal. Contacts indicated tight credit combined with the overhang of existing unimproved and distressed lots are likely to deter development for an extended period. Single-family home prices held steady, but downward pricing pressure continued to be strong for condominiums. Private nonresidential construction remained weak, as the elevated inventory of vacant industrial and retail properties continued to hold back demand for new construction. Public construction, however, increased with contacts noting more activity in highway, education, and medical projects.\nManufacturing\nManufacturing activity was strong in April led by the automotive, energy, medical, and consumer goods industries, but the rise in production softened some in May. With sales holding up in recent months, a contact in the auto industry indicated that production was running at a steady pace. Capacity utilization in the steel industry leveled off, and a contact indicated that it was likely to stay around its current level for the next 3-to-4 months as the pace of inventory replenishment slows. For example, more manufacturers of industrial metals noted that they were buying only what material they could immediately manufacture and sell. In contrast, demand for heavy equipment was indicated to be finally turning a corner; dealers were rebuilding inventories and have seen a significant increase in demand for rent-to-sell fleets. Mining and agricultural equipment sales remained stronger than for construction equipment. Contacts indicated that the pipeline for the export of capital equipment abroad, particularly to Asia and South America, remains robust. The increase in residential construction in April led to an increase in activity for housing-related manufacturers with shipments of wallboard in the District up slightly as a result.\nBanking and Finance\nCredit conditions improved, on balance, in April and May. Volatility increased across financial markets, and short-term lending and corporate credit spreads widened due in part to the uncertainty surrounding Europe's fiscal crisis. However, a contact noted that the financial system now has \"more cushion\" to absorb the higher cost of credit given the ongoing improvement in U.S. economic conditions. In a sign of this effect, banking contacts again reported better loan quality. Lending, particularly among large banks, increased with loan demand firming and terms and standards beginning to open up a bit. Residential real estate financing improved with secondary market appetite for jumbo and ARM mortgages beginning to return along with greater availability of private mortgage insurance. Bank lending remained more limited for commercial estate. However, private equity appetite for multifamily properties continued to be strong, and a contact noted that real estate investment by European and Asian investors was also on the rise.\nPrices and Costs\nPrice pressures were limited in April and May. Cost pressures from earlier increases in steel and energy prices were reported by several contacts, although the prices of both have decreased recently. Contacts noted that pressures from rising commodity prices were just starting to be noticeable and that the volatility of commodity prices was a greater concern. Wage pressures increased only modestly from the previous reporting period. Pass-through of cost pressures to downstream prices remained minimal, with pricing power in most industries continuing to be weak.\nAgriculture\nCrop conditions in the District were slightly better than normal for this time of year. Planting progress far exceeded that of a year ago with the exception of the southern portion of Iowa where heavy precipitation slowed field work. The emergence of corn plants was far ahead of average across most of the District, while soybean plant emergence was about typical. Rains were timely for the most part, but a period of cooler weather slowed crop development until hot and sunny weather gave a needed burst of energy to young plants in May. Corn and soybean prices remained in the same range as the prior reporting period, while wheat prices rose. Cattle and hog prices continued to rebound from last year's lows, as animal numbers were constrained. Milk prices stabilized after declines, remaining below break-even levels.\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 9, 2010\nBusiness contacts in the First District report stable to increasing activity in recent months compared with a year earlier, with most citing increases. Retail contacts note some potholes in the recovery path, but generally positive sales results; most responding manufacturers, staffing firms, and software and information technology services providers are also seeing recent or continued revenue growth. Home sales and prices are advancing, although contacts attribute most of the increases to homebuyers' tax credits; commercial real estate markets are also improving. Some firms are hiring beyond replacement and/or re-instituting merit-based pay increases. Firms' selling prices are generally stable. Notwithstanding positive trends, the outlook remains cautious.\nRetail\nContacted retailers in the First District report flat to positive sales results for the months of March, April and early May; year-over-year same'store sales increases range from zero to about 10 percent. A few contacts characterize sales as \"volatile\" and even those retailers reporting increases note some periods of slowing sales. All respondents mention weak sales for big-ticket items, but say that sales of core consumables, household items, or clothing are strong. Most contacts are cautiously optimistic regarding the next few months, but express concern about sales later in the year.\nInventory levels are primarily on target, although a few contacts indicate they are a little higher than expected because of soft sales. Capital spending is mixed, with some retailers spending on new store openings, remodels, and IT systems, and others remaining cautious on spending. Headcounts are stable. Vendor and selling prices are said to be constant, although one contact notes an increase in food'related commodity prices.\nManufacturing and Related Services\nMost contacted manufacturing firms suggest that a relatively strong first-quarter rebound in demand is continuing into the current quarter. Results are particularly good at relatively non-cyclical biopharmaceutical firms as well as highly cyclical firms such as semi-conductor manufacturers. Growth in demand at these firms was primarily in the double digits, with a few semi-conductor equipment suppliers reporting Q1 quarterly growth in the high double digits. These manufacturers had particularly bad years in 2009, but see continued strong demand through the current quarter and year. By contrast, revenues remain weak at business services firms as well as for a recreational equipment maker. These companies describe their sales environment as soft, with one noting that demand stagnated in the first quarter rather than picking up as anticipated. Nonetheless, each of these firms has seen at least small pockets of improving activity.\nInput costs remain relatively stable at most of the firms contacted, although costs have edged up a bit at firms whose production processes are highly energy intensive. In addition, a plastics manufacturer notes that some of its inputs are in short supply because suppliers ratcheted back capacity during the downturn and are reluctant to bring it back online. Selling prices are generally unchanged, as the marketplace remains highly competitive. However, one firm recently removed discounts it instituted in 2009, and a couple of others reported being able to implement modest planned price increases.\nEmployment is mostly stable among contacted manufacturers, although headcounts remain well below their 2008 levels at a number of firms. A few firms have hired a small number of workers so far this year and they plan to increase headcount slightly as the year progresses. The strongest potential employment gains are in the biopharmaceutical industry where one firm plans to increase its headcount during 2010 by about 10 percent. Responding firms that froze salaries last year have generally reinstated merit'based increases or plan to do so by the middle of the year. Most manufacturers continue to report that their planned capital expenditures for 2010 are in line or slightly greater than their expenditures in 2009. Much of the planned capital spending for this year is for infrastructure'related improvements.\nOverall, manufacturers again indicate that they are cautiously optimistic about the outlook for their business and the economy for the remainder of 2010. Some express concern about the potential impact of the current situation in Europe on consumer demand, although most say their exposure to European markets is relatively limited. Some biopharmaceutical companies expect health care reform to hurt their bottom lines; one company says the result will be less money for research and development.\nSoftware and Information Technology Services\nSoftware and information technology contacts in the First District report improved business conditions, with demand up significantly relative to a year ago. Increased activity is leading firms that previously reduced headcount to hire selectively, and merit increases have been reinstated. Respondents note that many large corporate customers are raising their technology spending budgets, but some small and mid-size businesses may still not possess the credit capacity to do so. While some discounting pressure still exists, contacts report they have been able to maintain prices. For those software and IT firms with substantial shares of their business located internationally, the European debt crisis is a major concern and the strengthening dollar continues to negatively affect revenues. Despite these concerns, respondents expect continued growth through the remainder of the year.\nStaffing Services\nNew England staffing respondents report that the upward trends of the second half of 2009 and the beginning months of 2010 have continued; however, a few contacts lament that overall activity still remains below expectations. Revenues have risen year-over-year, ranging from \"slightly better\" to up nearly 50 percent. The number of conversions from temporary to permanent staff is rising and direct'hire placements are beginning to pick up. Labor demand from the pharmaceutical, biomedical, aerospace, and semi-conductor industries is steady. There is renewed activity in the legal sector, with increased labor demand for paralegals, business support personnel, and attorneys. On the other hand, the construction, architecture, civil engineering, marketing, and accounting sectors remain slow.\nIn terms of labor supply, the skills of job seekers often do not align with the needs of employers; one contact notes that hundreds of college graduates are looking for work but available positions often require more experience. Other contacts indicate that highly skilled candidates are receiving multiple offers; clients, in turn, are showing more willingness to pay higher rates. In addition, turnover has recently increased, as those with jobs seem somewhat less reticent to give them up. Looking forward, First District staffing contacts largely express increased optimism and predict gradual improvement through 2010.\nCommercial Real Estate\nAccording to contacts around New England, commercial leasing activity is at least flat, and in some cases noticeably improved, compared to the last report. A Rhode Island contact notes a significant increase in leasing activity in recent weeks, driven by a backlog of postponed renewals. He characterizes tenants as wanting to make deals while they still have significant bargaining power; furthermore, he hears word that some firms are beginning to consider new hiring and expansion of operations. A Hartford contact describes leasing activity as flat in his metropolitan area and says this is consistent with local fundamentals, such as limited hiring activity and persistent retail vacancies downtown; nonetheless, he notes modest improvements in sentiment among both business professionals and consumers. Boston contacts report an uptick in lease deal volume; one was pleased to see a recent lease deal that will absorb a large portion of space in the Hancock tower, but otherwise had little good news to report. Across the region, rental rates and vacancy were largely unchanged in recent weeks. With the exception of industrial properties in Rhode Island, commercial property sales activity was slow across markets in the region.\nContacts in Providence and Boston note that debt default rates for commercial properties remain significant, and defaults are perceived to be on the rise in Boston's suburban corridors. The good news, however, is that properties and/or debt are changing hands as new equity is increasingly willing to invest in commercial real estate. A commercial real estate lender in Boston confirmed the influx of equity cash as a welcome development after at least 18 months of investor skittishness. The same lender is seeing many worthy lending opportunities in greater Boston and reports facing increasingly stiff competition from other regional lenders to lower rates and relax loan terms.\nThe outlook is mixed among respondents around the region. The Providence contact is more optimistic about both hiring and leasing over the next six to 12 months than a Boston contact, who maintains his prediction that rents have further to fall. In Hartford, the outlook is largely unchanged, and a Boston banking contact remains \"guardedly optimistic.\" However, nearly all contacts point to the recent troubles in Europe as a new source of uncertainty on the horizon.\nResidential Real Estate\nResidential real estate markets in New England experienced large gains in April compared to a year earlier; contacts attribute much of the improvement to the impending expiration of the homebuyer tax credits. Home sales increased sharply year-over-year across the region, ranging from a 26 percent increase in Rhode Island to a 63 percent increase in Maine. Condo sales increased between 39 percent and 64 percent in April compared to a year ago. The median price of homes also showed modest improvement in all markets. The median price of condos in the region also increased modestly year-over-year in April, except in Rhode Island, where it fell 15 percent.\nApril 30 was the deadline to sign a contract on a home in order to be eligible for the homebuyer tax credits; because June 30 is the associated deadline to close on the home and contract'signings continued through April, contacts expect sales numbers to remain strong in May and June. There is no consensus among respondents about how markets will perform after June, although some cite anecdotal evidence of continued activity after April 30 and most think that low interest rates and fairly low prices will continue to make the market attractive for prospective buyers.\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 9, 2010\nBusiness conditions continued to improve in the Eleventh District. Activity in manufacturing, staffing services, transportation services, housing and energy grew modestly. Retail sales were flat to slightly down but in line with retailers' expectations during the reporting period. While outlooks remained positive, contacts from some industries noted concerns about how the European debt crisis and recent stock market volatility would affect future business.\nPrices\nMost contacts said prices were holding steady, although some paper, fabricated metals, and aircraft and parts manufacturers reported slight increases in selling prices. Contacts at department stores said less discounting was taking place. Input and raw material costs were generally stable, but there were reports of an uptick in the cost of lumber, food, engineered metal products, linerboard, steel and some industrial metals. Firms' ability to pass on these cost increases remained limited.\nCrude oil prices dropped from $85 per barrel in early April to near $70 in late May. Natural gas prices were flat during the reporting period. Sharp increases in the price of petrochemicals such as ethylene and propylene seen earlier are reversing as ethylene plants come back online and refineries increase utilization rates. Declining prices have spurred export demand for U.S. petrochemicals and related products.\nLabor Market\nEmployment levels held steady at several respondent firms and there were a few reports of hiring activity. Staffing firms continued to cite increased demand for their services, and some contacts in transportation services, automotive sales, transportation and construction-related manufacturing said they had either added a few employees or planned on hiring additional workers. Wage pressures remained subdued, with the exception of the airline industry. Many firms are continuing with salary or 401(k) contribution freezes, although a few noted that they planned on giving small pay increases this year. In addition, staffing firms reported that pay rates were stable.\nManufacturing\nMost construction-related manufacturers said demand ticked up from low levels. Orders from the public sector and homebuilding industry have improved but demand for commercial construction materials remains weak. A few contacts said they were slowly increasing work hours or capacity utilization rates. Although there is still caution among contacts, outlooks were slightly more optimistic than the last report. Fabricated metals producers cited continued increases in demand, and reported that large government-related projects have boosted the sales outlook for the next three months.\nSome high-tech manufacturers noted slight easing in export demand due to the European fiscal crisis, while others said orders continued to grow at a consistently strong pace. Inventories were reported to be under control and one semiconductor respondent said they were able to increase inventories to desired levels. Most respondents remain optimistic that demand will be strong over the next six months but noted that the outlook has become more uncertain due to fiscal problems in Europe.\nProducers of trailers said continued strength in demand has boosted the outlook over the next three months. Manufacturers of aircrafts and parts said orders from the commercial and general aviation industry have improved, while demand for government and military aircraft remains weak. An aircraft repair and maintenance firm said demand strengthened over the past month, and is expected to rise further over the next three months.\nReports from paper manufacturers were mixed. Most respondents reported strong demand while one corrugated box manufacturer noted a decline in orders. Food producers noted an increase in orders. Inventories are at desired levels but some food manufacturers said stocking up for certain items has been an issue due to the recent acceleration in demand.\nPetrochemical producers cited improved domestic demand for most products except for polyvinyl chloride, which is tied to commercial and residential construction. Demand for oil products is above year-ago levels, and refinery capacity utilization rates have risen from the low 80 percent range in early April to the high 80s in late May. Refinery margins have improved and are at their highest levels for the year.\nRetail Sales\nRetail activity was flat to slightly down but in line with contacts' expectations during the reporting period. Contacts say the decline in sales was largely due to Easter pulling sales forward into March. Department store sales were flat despite strong demand for apparel and accessories. Most contacts say Texas sales are faring slightly better than the national average, and same-store sales are on track to hit low single-digit nominal growth this year. The outlook is for gradual improvement for the remainder of the year, with some concern over the impact of Europe's fiscal situation on consumer confidence.\nAutomobile dealers said sales ticked up since the last report. Inventories remain lean. Prices have been inching upwards due to some pullback in incentives introduced earlier. Contacts expect demand will gradually improve through the end of the year.\nServices\nStaffing firms say demand remains strong and widespread across sectors. Orders are mostly for contract work but assignments are becoming longer in length and temp-to-hire placements continue to pick up pace. Sustained growth in demand has led contacts to expand staff levels and has boosted the near-term outlook. Accounting firms note demand remains flat and the outlook continues to be cautiously optimistic. Law firms report weak demand for most types of legal services, with the exception of a slight pickup in foreclosure-related activity. Contacts say that they will have fewer summer clerkships than normal due to sluggish demand.\nDemand for transportation services was positive suggesting further improvement in overall economic conditions. Intermodal cargo volumes were flat over the past month but are slightly up from three months and year-ago levels. Shipping firms say large freight volumes continued to grow strongly but small parcel shipping volumes were flat over the reporting period. Railroads reported a significant and broad-based increase in shipments, and noted that the outlook is more upbeat than last time. Airlines cited further improvement in demand, with leisure travel seeing continued growth and business travel recovering. Contacts say domestic travel is rebounding but is not as strong as international demand. The outlook is positive as revenues have improved due to fare increases and advance bookings are holding up well.\nConstruction and Real Estate\nHousing demand continued to improve. Realtors reported positive gains in home sales as the homebuyer tax credit contributed greatly to a wave of buying. Builders increased starts due to tight new home inventories and improved sales activity. Prices were steady to slightly higher, according to respondents. Still outlooks reflect uncertainty about the remainder of the year and many contacts expect flat demand in the second half.\nApartment markets continue to fare better than expected, with occupancy and rents improving in most Texas metros. While concessions are ongoing, contacts noted they are not as widespread as earlier in the year.\nCommercial real estate contacts said that although conditions remain weak, there are signs that the sector is firming. Leases and property sales have picked up as rents and prices have come down. Some contacts said there were a few instances of property prices being \"bid up\" due to the large amount of interested buyers versus the low amount of quality properties for sale. Despite the improvement, the large amount of space available is expected to keep commercial construction subdued for the remainder of this year.\nFinancial Services\nOverall loan demand softened during the reporting period. There is more commercial and industrial loan activity in the pipeline but consumer loan demand outside of credit cards remains sluggish. Contacts report that they are turning down many potential mortgage borrowers due to poor credit. Credit standards remain tight and loan pricing is unchanged. Some contacts reported an increased inflow of deposits, which they attributed to the unease arising from recent stock market volatility. Although contacts are relieved that the Federal Reserve will retain regulatory oversight over state member banks, there continues to be concern regarding other impending regulation changes. The outlook is slightly optimistic with some concern about the impact of the Greek credit crisis.\nEnergy\nThe rig count rose further over the reporting period and most of the increase was in oil-directed drilling. Even with the drop in oil prices from $85 to $70 per barrel, oil-directed projects remain profitable. In contrast, at $4 per mmbtu prices do not justify unhedged shale gas drilling. Hence, as current hedges expire, contacts say that there will likely be a slowdown in gas-directed drilling.\nAgriculture\nLack of rainfall and high winds dried out the topsoil in some areas but recent rains have restored much of the lost moisture. Spring planting is moving ahead of its normal pace, and crop conditions are significantly better than last year. Demand for several agricultural products has improved and exports of cotton, rice and grains are up from last year. Cattle and cotton prices have risen and remain strong, while grain prices have weakened slightly.\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/2010/2010-06-kc

"Beige Book Report: Kansas City\nJune 9, 2010\nThe Tenth District economy grew modestly since the last survey with expectations of further improvement in the coming months. Consumer sales edged up at retail stores and auto dealerships, and District contacts were hopeful that rising consumer confidence would boost future sales. Residential real estate activity improved slightly, but real estate agents expected expiring tax credits to weigh on the housing rebound. While the commercial real estate market remained stressed, District contacts noted a slight improvement in leasing activity.\nManufacturing activity expanded modestly, transportation activity strengthened, and factory managers expected further production gains. Bankers reported improved expectations for loan quality, and credit standards were generally unchanged. Energy activity expanded further as oil and natural gas production increased. Agricultural conditions improved with higher livestock profits and farmland values. Despite higher input prices, retail prices and wage pressures remained low, and few firms planned to pass through additional costs to consumers.\nConsumer Spending\nConsumer spending continued to improve, and many contacts expected further gains in retail sales. Spurred by lower prices and promotional advertising, retailers reported a rise in sales led by summer apparel items and lower-priced appliances. Auto dealers reported strong demand for used vehicles, which helped boost auto sales and reduce vehicle inventories. Some contacts felt rising consumer confidence would encourage future auto sales. Restaurant sales declined with fewer diners and a flat average check amount. With the onset of seasonal travel, tourism activity and hotel occupancy rose. Further improvements in the tourism and hotel industries were expected as summer travel picks up.\nReal Estate and Construction\nResidential real estate activity improved slightly in April and May, while the decline in commercial real estate activity slowed. Lower priced single-family homes sold well in April as buyers rushed to take advantage of tax credits. In contrast, sales of higher-priced homes slowed, contributing to a rise in home inventories. Real estate agents expected home sales to fall in the coming months due to expiring tax credits and weak job growth in some areas of the District. After rising in the last survey period, residential construction activity held steady. Mortgage lending activity rose with new home purchases, and loan refinancing volumes increased with lower mortgage rates. Commercial real estate activity remained weak and below year-ago levels. However, lower rents appeared to slow the rise in vacancy rates and raise absorption rates since the last survey period. District contacts expected leasing activity to rise faster than sales activity for commercial property in the coming months. Commercial construction activity continued to decline due in part to difficulty accessing credit.\nManufacturing and Other Business Activity\nManufacturing activity grew at a modest pace in April and May while transportation firms reported sustained growth. After several months of solid gains, the pace of production moderated at both durable and non-durable goods producing plants. The volume of new orders, order backlogs, and shipments edged down from March levels while finished goods inventories rose slightly. Employment levels were stable and fewer firms planned to increase payrolls. Still, manufacturing activity strengthened compared to a year ago, and more plant managers expected factory production to ramp up in the next six months. Some District manufacturers noted an increase in supplier delivery times, and sales activity in the transportation sector rose further. Most transportation firms anticipated the rebound would continue through the summer. Some companies were having difficulty finding qualified drivers, and a few contacts raised concerns about future capacity constraints. The high-tech industry reported a slight uptick in sales activity, partly due to an increase in government contracts.\nBanking\nBankers reported steady loan demand, higher deposits, and an improved outlook for loan quality. Overall loan demand was essentially unchanged, following a series of declines over the last year. Demand for commercial and industrial loans was flat, while demand for commercial real estate loans and residential real estate loans increased moderately. Consumer installment loans continued to trend downward. Credit standards were generally unchanged. Slightly more bankers reported an improvement in loan quality from one year ago than reported a deterioration. Also, for the first time since late 2007, respondents expected stable rather than declining loan quality over the next six months. Deposits increased moderately after showing no change in the previous three surveys.\nEnergy\nEnergy production expanded since the last survey period, and additional gains were expected in the coming months. The number of active drilling rigs in the District rose further, primarily due to expansion in Oklahoma and New Mexico. Some firms reported difficulty finding qualified workers, especially engineers. Crude oil prices were expected to rise due to an uptick in demand from the industrial sector and higher gasoline use for summer travel. Since the last survey, fewer contacts expected further declines in natural gas prices. However, several natural gas producers were concerned that prices would remain low due to excess supply. With increased production and limited demand, supplies at natural gas storage facilities grew at a record pace. Though District coal production slowed in April and May, year-to-date volumes approached 2009 levels.\nAgriculture\nAgricultural conditions improved since the last survey period. Overall, the winter wheat crop was reported in good condition. However, prolonged cool, wet weather promoted wheat crop diseases, which could reduce yields in some areas of Nebraska, Kansas and Oklahoma. Corn planting was almost complete while soybean planting was slightly behind schedule. Crop prices were little changed since the last survey period, but hog and cattle prices rose significantly with further contractions in supplies. Improved incomes among livestock producers contributed to a rise in District ranchland values. Cropland values also increased with strong farmer demand and nonfarm investor interest. Agricultural lenders reported a slight decline in loan repayment rates, but loan renewals and extensions held steady.\nWages and Prices\nWage and retail price pressures remained low in April and May; however, input prices rose for some District firms. District labor markets improved slightly and contacts generally reported little wage pressure and few problems finding qualified workers. After falling in April and May, retail prices were expected to dip further in the coming months, and builders expected lumber prices to fall from their recent spike. However, materials prices, especially steel, rose sharply for District manufacturers. In addition, transportation companies noted rising fuel costs, and restaurant owners paid higher food prices. Despite rising input costs, most District contacts were reluctant to increase selling prices.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Minneapolis

/beige-book-reports/2010/2010-06-mi

"Beige Book Report: Minneapolis\nJune 9, 2010\nThe Ninth District economy grew at a steady pace since the last report. Consumer spending, tourism, residential real estate and construction, services, manufacturing, energy, mining and agriculture saw increases. Commercial real estate was flat at low levels, and commercial construction activity was slow. Some signs of strengthening were noted in labor markets. Wage increases were subdued, and overall prices remained level.\nConsumer Spending and Tourism\nConsumer spending increased moderately since the last report. A major Minneapolis-based retailer reported that same-store sales in April and March combined were up 3 percent compared with a year earlier. A Minnesota-based manufacturer of outdoor maintenance equipment reported a strong start to the spring selling season. Meanwhile, a North Dakota mall reported that April sales were up about 3 percent, and a Montana hardware store operator noted that recent sales were above year-ago levels. Retail sales dipped slightly during April in some areas in part due to a relatively early Easter. For example, traffic at two Minneapolis area malls was down 3 percent and 7 percent, respectively, in April after increasing in March.\nAutomotive dealers in the Minneapolis-St. Paul area reported that car sales and maintenance and repair business were up from a year earlier. April new car sales were up significantly higher from March in Montana and the Upper Peninsula of Michigan, but were down slightly in western Wisconsin.\nTourism contacts are optimistic for the summer season. An official in the Upper Peninsula reported that tourism traffic was starting to look pretty good and a strong summer season is expected. The number of nonresident visitors to Montana is expected to increase 2 percent compared with a year ago after a flat year in 2009, according to state tourism officials. Inquiries about summer tourism activities were strong in Duluth, Minn. However, recent leisure bookings by a Minnesota travel agency were down during April and May, and advanced bookings for the summer season were slow.\nConstruction and Real Estate\nCommercial construction was weak. April nonresidential permits fell dramatically in Sioux Falls, S.D. Several contacts in infrastructure building noted that the volume of publicly funded work is declining. However, a commercial builder in northeastern Minnesota and northwestern Wisconsin said that while most sectors were weak, demand for industrial construction was stronger. Residential construction continued to rebound. Housing permits in the Minneapolis-St. Paul area nearly doubled in value in May from the previous year; April permits rose 20 percent in value in Sioux Falls. The number of permits issued in and around Bismarck, N.D., increased from a year earlier.\nCommercial real estate was slow. The amount of unused space in the retail market in Minneapolis increased by 135,000 square feet during the first quarter. An industry contact in northern Wisconsin noted that nearly every sector in his area was overbuilt. Residential real estate saw continued slow growth. April home prices increased in Minneapolis-St. Paul for the fourth consecutive month, the longest period of increasing prices since 2004. Brokers in Fargo, N.D., and Duluth, Minn., noted increased activity in April as home buyers took advantage of the federal tax credit before its expiration. Contacts around the District reported increased housing short sales for distressed properties.\nServices\nContacts from various services firms noted a recent increase in business. 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 small North Dakota information technology firm commented that the \"outlook is good.\"\nManufacturing\nManufacturing output was up since the last report. An April survey of purchasing managers by Creighton University (Omaha, Neb.) showed that manufacturing activity increased significantly in Minnesota and South Dakota and increased slightly in North Dakota. A computer component plant in western Wisconsin planned to increase capital expenditures significantly in 2010. An expansion of a food processing facility is under way in North Dakota.\nEnergy and Mining\nActivity in the energy and mining sectors increased since the last report. Late May oil exploration increased from early April. Wind energy projects continued to be planned and built in the western portion of the district. Iron ore production in Minnesota increased about 5 percent in April from March.\nAgriculture\nAgricultural activity increased. Across most of the District, crops were planted earlier than the five-year average and are emerging at a faster pace. However, the Minneapolis Fed's first-quarter (April) survey of agricultural credit conditions indicated that lenders expect overall agricultural income and capital spending to decrease in the second quarter.\nEmployment, Wages and Prices\nSome signs of strengthening were noted in labor markets. In Minnesota, a shoe manufacturer recently announced plans to hire up to 80 more workers, and a manufacturer of windows and doors increased the workweek for employees after reducing their time during the economic downturn. About three-quarters of respondents to a Minneapolis Fed survey of temporary employment firms in Minnesota, North Dakota, and Wisconsin reported an increase in the number of customers and employed workers. Placements at industrial firms showed the largest increase. At a Montana employment office, more businesses were looking to hire employees, but overall hiring activity remained relatively slow.\nDespite signs of improvement, overall labor markets remained weak. In Montana, a recent job fair attracted hundreds of job seekers for openings at almost 50 companies. A wood furniture factory and chain of stores in Montana recently went out of business, affecting over 60 workers statewide. Almost 50 workers were laid off by a defense contractor in Minnesota.\nWage increases were subdued. According to respondents to a recent St. Cloud (Minn.) Area Business Outlook Survey, only 18 percent expect to increase employee compensation at their companies over the next six months. In last year's survey, 21 percent expected to increase compensation. Several temporary staffing firms noted flat to lower wages. The majority of respondents from the Minneapolis Fed's preliminary survey of professional business services firms indicated no increases in wages for the next year. A nurses union in Minneapolis-St. Paul recently approved a one-day strike in response to negotiations with area hospitals, which had proposed to change work rules, cut pensions, and reduce health benefits.\nOverall prices remained level. Some price pressures were noted in materials for large construction projects; however, in recent weeks, prices for oil, copper, and some steel products decreased. In addition, fertilizer prices were down from a year ago.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Minneapolis

/beige-book-reports/2010/2010-04-mi

"Beige Book Report: Minneapolis\nApril 14, 2010\nThe Ninth District economy grew moderately since the last report. Consumer spending, tourism, residential real estate and construction, services, manufacturing, energy, mining and agriculture saw increases. Commercial real estate was flat at low levels, and construction activity was slow. Labor markets remained weak, but some signs of hiring were noted. Overall compensation levels were flat, and price increases were moderate.\nConsumer Spending and Tourism\nConsumer spending increased modestly. A Minneapolis-St. Paul area mall noted that February same-store sales were up 7 percent compared with a year ago; traffic levels were up even more. A major Minneapolis-based retailer reported that same-store sales in February were up about 2 percent compared with a year earlier. Recent retail activity in Great Falls, Mont., has picked up modestly; Canadian traffic was solid. A Minnesota-based restaurant and bar chain noted that March sales and guest counts were up over 5 percent compared with a year ago, while another Minnesota-based restaurant chain reported that March sales were down 2 percent.\nVehicle sales picked up in March compared with a year ago when sales were substantially down. A number of dealerships in the Minneapolis-St. Paul area reported that sales were up over 40 percent in March compared with a year ago; strong incentives by automakers helped boost sales. Recent vehicle sales have been steady in North Dakota, according to a representative of an auto dealers association.\nOverall travel and tourism activity was up slightly. A ski resort in northern Minnesota noted that February and March ski lift sales and lodging were higher than a year ago. A Minnesota-based travel agency noted that corporate travel during February and March was up slightly from a year ago. Winter tourism activity was about even with a year ago in Montana, but tourism-based businesses noted an uptick in February and March, according to an official. In northwestern Wisconsin, excellent snow conditions boosted snowmobiling and cross-country skiing in February; warm weather in March brought an early end to snow sports, but tourism businesses are optimistic for the summer season.\nConstruction and Real Estate\nCommercial construction was weak. February nonresidential permits in Sioux Falls, S.D., were substantially lower than a year earlier. A producer of commercial construction materials said demand has been slackening. However, several hotel and medical developments are in progress in Great Falls, Mont.\nMeanwhile, residential construction showed signs of strengthening. March home building permits for the Minneapolis-St. Paul area more than doubled in value from the same month a year earlier--their highest level since 2007--primarily due to gains in the multifamily sector. In contrast, February residential permits in Sioux Falls decreased 21 percent from a year earlier. Construction activity in western Montana continues to be very slow, according to developers there.\nCommercial real estate was flat at low levels. A commercial real estate broker in Fargo, N.D., said vacancy rates were down slightly for office properties, but the industrial segment was weaker. A Minnesota commercial broker said rents there were at their lowest levels since 1990.\nResidential real estate continued to rebound. Closed sales in late March were 11 percent higher than a year earlier in Minneapolis-St. Paul, and sales prices increased. Sales also picked up in western Montana, due in part to big reductions in asking prices.\nServices\nOverall activity increased slightly in the professional business services sector since the last report. Contacts from information technology and Web development firms noted solid orders. A law firm that specializes in debt collections and another that specializes in bankruptcies were expanding due to strong demand. However, contacts from other law firms indicated that new business was unchanged. Architects indicated flat activity at low levels.\nManufacturing\nManufacturing output was up since the last report. A March survey of purchasing managers by Creighton University (Omaha, Neb.) showed that manufacturing activity increased significantly in Minnesota and South Dakota and was flat in North Dakota. A small Minnesota transmitter maker plans to expand into a larger facility. In North Dakota, a wind energy component manufacturer plans to build a plant.\nEnergy and Mining\nActivity in the energy and mining sectors increased since the last report. Late-March oil exploration increased significantly from early February. A major electrical utility recently announced plans for a large-scale wind energy farm in western Minnesota. Several sources noted solid prices and demand for iron ore, as production in February increased slightly from January levels.\nAgriculture\nAgricultural activity increased. The calving season was progressing very well due to the mild end to winter across most of the District. Cattle producers were optimistic, as they expected a continued uptick in output prices. District farmers planned to plant 3 percent more soybean acres, 4 percent fewer wheat acres and about the same number of corn acres as last year, according to the U.S. Department of Agriculture. Meanwhile, producers of organic agricultural products noted a decrease in demand, and dairy producers were concerned about softening in output prices.\nEmployment, Wages and Prices\nLabor markets remained weak, but some signs of hiring were noted. A tractor supply store in eastern Montana reported receiving more than 30 applications for every job opening. Employers in the Sioux Falls area noted a relatively large number of applications for seasonal jobs. Also in South Dakota, 35 workers were laid off at a technology firm, and about 25 workers were laid off at a business outsourcing company. A North Dakota manufacturer announced plans to lay off 60 workers.\nIn contrast, two employment placement firms in Minnesota reported an increase in hiring for some entry level positions and an increased interest in executive placement services. Also in Minnesota, a bank announced intentions to hire more wealth management advisors, a wind energy project just under way will create 150 jobs and an auto dealer will hire 15 salespeople.\nOverall wages were flat, as a number of contacts noted that wages and salaries at their companies were level with a year earlier. The University of Minnesota's faculty senate recently approved a measure to cut pay temporarily for most University employees by about 1 percent.\nPrice increases were moderate. Minnesota gasoline prices at the end of March were up slightly from the end of February. However, copper and nickel prices increased since the last report, as well as some prices for lumber and steel products.\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/2010/2010-04-kc

"Beige Book Report: Kansas City\nApril 14, 2010\nThe Tenth District economy expanded moderately during March, and District contacts expected economic conditions to improve further in coming months. Warmer weather conditions led to increased retail traffic and supported a modest rebound in consumer spending, generating some optimism among District contacts. Manufacturing and transportation activity continued their steady rebound, resulting in a few new hires. District housing activity rose and contacts anticipated further improvements in coming months. In contrast, commercial construction activity continued to wane. Energy activity expanded further, but natural gas production was expected to ease with slower summer demand. Agricultural conditions remained solid as livestock profits improved and strong crop profitability boosted planting expectations this spring. Wage pressures remained muted and retail prices held steady, but some manufacturers were considering raising selling prices due to higher raw material costs.\nConsumer Spending\nConsumer spending rebounded in March as customer traffic improved with warmer weather. Retailers reported higher than expected sales and were optimistic that business activity would continue to recover. Apparel items sold well, and demand for lower-priced durable goods rose. After months of declines, auto dealers reported steady sales in March and were hopeful that increased showroom traffic would spur purchases. Mid-size cars and SUVs were in greatest demand. Restaurants reported more diners but less spending per check, resulting in flat sales. Travel and tourism activity edged up and was expected to strengthen further approaching vacation season. District hotel owners reported higher average room rates and increased occupancy.\nManufacturing and Other Business Activity\nManufacturing and transportation activity expanded solidly since the last survey period. Manufacturing production improved to near year-ago levels as slightly slower growth at non-durable goods plants was offset by stronger durable goods production. A moderate rise in shipments and exports reduced inventories and the backlog of orders increased slightly. Producer expectations for future factory activity improved with sustained growth in new order volumes. Employment levels held steady during the survey period, but more manufacturers planned to increase payrolls over the next six months. Capital spending plans, however, remained largely on hold. After rebounding in the last survey period, sales activity in the transportation sector rose further, but firms were concerned about rising fuel costs. Some trucking companies were hiring qualified drivers. The high-tech industry reported a decline in demand for commercial consulting services as clients cut costs. However, an increase in projects to retro-fit existing facilities to maximize efficiency was noted.\nReal Estate and Construction\nResidential real estate activity strengthened in March, while commercial real estate activity weakened further. Residential builders reported an upswing in building starts after the harsh winter. Home sales and buyer traffic moved higher, though sales prices fell slightly with a rise in existing home inventories. The home buyer's tax credit continued to support the starter home market, but District contacts expected slower sales after the incentive program expires. Sales of higher priced homes remained sluggish. Mortgage lenders reported an increase in home purchase loans while loan refinancing volumes declined. Construction supply firms anticipated stronger sales for new construction materials as well as higher consumer demand for home improvement supplies. In contrast, commercial real estate activity remained well below year-ago levels. Contacts also noted that few new construction projects had qualified for financing due to continued tight credit conditions. Vacancy rates edged higher, rents fell further, and sales were expected to remain sluggish. Leasing concessions were common as landlords tried to retain current tenants and attract new ones. Some distressed commercial properties were being put on the market and more were expected to follow.\nBanking\nBankers reported lower loan demand, stable deposits, and an unchanged outlook for loan quality. Overall loan demand declined at a slightly faster pace than in the previous survey. Demand for commercial and industrial loans and commercial real estate loans fell moderately. Demand also declined somewhat for residential real estate loans and consumer installment loans. A few banks tightened credit standards on commercial real estate loans, but credit standards for other loan categories were generally unchanged. Somewhat fewer banks than in the previous survey reported lower quality than a year ago. As in the previous survey, however, about a third of respondents expected loan quality to decline over the next six months. Deposits continued to show little change overall. Several respondents said that some of their depositors were shifting funds to alternative investments such as stocks and bonds in search of higher yields.\nEnergy\nEnergy activity expanded during the survey period, and additional modest gains were expected in the coming months. After rising in March, the number of active rigs in the District approached year-ago levels. Several firms planned to hire additional staff, primarily engineers and skilled labor. Crude oil prices were expected to rise due to a seasonal uptick in demand and improvement in the world economy. Natural gas prices, however, were expected to decline with excess supply and lower summer demand. Some contacts noted that the expansion in drilling activity could be constrained by the availability of labor, equipment, supplies, and financing. A Wyoming producer also noted difficulty obtaining drilling permits and a decline in land lease sales which could also hinder future development. District coal production increased in March, but remained below year-ago levels. Ethanol profit margins have fallen below capital costs and biodiesel production remains stalled after the loss of a federal tax credit eliminated profits.\nAgriculture\nAgricultural conditions improved since the last survey period. Livestock prices strengthened in March boosting profitability, especially for cattle producers, and prices were expected to rise further with smaller supplies. Crop prices edged down in March with the prospects of increased plantings and bumper crops. The winter wheat crop was reported in generally good condition. District plantings of corn and soybeans were expected to increase this year, most notably in Kansas where winter wheat plantings declined. Soil moisture levels were more than adequate and contacts were concerned that excessively wet fields could delay spring planting again this year. Lenders reported ample funds were available to satisfy rising demand for farm operating loans in preparation for spring planting. Cropland values remained solid with limited sales activity.\nWages and Prices\nWages held steady since the last survey period, and some factories considered raising selling prices in coming months as raw materials prices rose further. Contacts reported little wage pressure in District labor markets, and most companies hiring new workers were not offering higher salaries to attract qualified applicants. Input prices rose in March and were expected to rise further in coming months. District manufacturers reported additional increases in prices paid for raw materials. Builders and construction supply companies stated that prices for construction materials increased, especially for roofing shingles and asphalt. Transportation companies paid higher prices for fuel, and restaurant owners noted higher food costs. Some manufacturers planned to raise selling prices in the months ahead. Most retailers, however, did not anticipate raising prices, and restaurants expected menu prices to remain flat.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Atlanta

/beige-book-reports/2010/2010-04-at

"Beige Book Report: Atlanta\nApril 14, 2010\nBusiness contacts around the District described economic activity as improving in March and early April. Retailers saw an increase in traffic and sales and their outlook improved. Auto sales increased on a year-over-year basis, while revenues in the District's tourism segment were described as stable. Residential real estate contacts indicated that both new and existing home sales improved and were above weak levels from a year earlier. Commercial contractors, on the other hand, continued to cite weakness in nonresidential construction activity. District manufacturers noted further improvement in new orders and production. The flow of bank credit to businesses remained subdued. Permanent hiring remained weak. However, temporary help agencies noted an increase in job orders. Manufacturers and homebuilders reported increases in input prices but indicated that they were not able to pass them through to consumers.\nConsumer Spending and Tourism\nDistrict merchants indicated an improvement in traffic and sales in March. Retailers reported that despite the uptick in sales, they continued to keep inventory levels lower than normal; several merchants related that they preferred risking lost sales to having excess inventories. The outlook among retail contacts also improved with the majority expecting sales to increase over the next couple of months. District vehicle sales increased from a year ago, largely driven by an expansion in fleet sales deferred from last year.\nTourism-related spending was described as stable in most parts of the District. Contacts in Atlanta, Miami, Nashville, New Orleans, Orlando, and Tampa all reported hotel occupancy rates above the national average from February to March. Cruise lines noted increased demand and have unwound some earlier price discounting. The near-term outlook among hospitality contacts remained generally upbeat. However, corporate bookings remained at very low levels at some high-end resorts.\nReal Estate and Construction\nHomebuilders reported improved new home sales across the region, and that construction activity increased modestly from very low levels. Several homebuilders noted that difficulty in obtaining mortgage financing and lower property appraisals were impeding sales. New home inventories remained down, sharply from a year earlier, and the majority of homebuilders continued to cite year-over-year price declines. Overall, the outlook for home sales and construction improved modestly from the previous report.\nRealtors indicated a slight improvement in existing home sales with nearly half of those contacted reporting modest increases. Sales at the low-end of the market continued to outpace those at higher price points. However, sales growth at the low-end moderated from late-2009 levels, while mid- to high-end home sales stabilized. Similar to comments from homebuilders, many Realtors also noted that difficulty in obtaining financing was impeding home sales. Most continued to cite downward pressure on home prices. The outlook for sales over the next several months continued to be modestly positive.\nLow levels of commercial construction continued across much of the District. Most contractors described activity as relatively flat compared with previous reports, and a few cited additional weakness. The volume of backlogs was little changed but remained lower than a year ago. Most indicated that the demand for new construction continued to be soft. Looking ahead, the majority of contacts anticipated commercial construction will continue to be weak for the remainder of the year.\nManufacturing and Transportation\nThe majority of District manufacturers reported that new orders increased and production levels improved. Contacts noted increased hours worked and many anticipated employment gains in the short-term. A few auto assembly plants recalled some workers. Freight demand continued to improve from low levels. Regional rail shipments through mid-March were up notably for automotive, chemical, and other raw industrial materials.\nBanking and Finance\nThe flow of bank credit to businesses remained subdued. District bankers continued to indicate that ample credit was available to qualified borrowers, and many noted that the volume of loan applications was low for households and small businesses. In contrast, several firms noted that tighter credit standards were making it difficult for them to obtain loans. Some contacts suggested that trade credit terms also tightened with some suppliers having modified terms or reduced credit without regard to payment history.\nEmployment and Prices\nUnemployment remained high across the District in February and March. Some employers indicated that public policy uncertainty had contributed to some reticence to hire permanent workers. However, many businesses continued to increase hours worked for existing staff, and some increased the number of temporary staff, particularly in Florida.\nDistrict manufacturing and homebuilder contacts reported increases in commodity-related material prices compared with a year ago, though prices softened somewhat on a monthly basis. Several businesses expressed concern that supply chain capacity reductions in some industries could lead to further input price increases if product demand increased rapidly.\nNatural Resources and Agriculture\nCrude oil production in the District edged up in late February and March. The increase in output, combined with soft energy consumption, pushed crude inventories in the Gulf of Mexico close to the top of their seasonal average for this time of year. Recent wet weather and colder-than-usual temperatures have negatively affected some crops in Alabama and Florida and limited farm work in some areas.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Philadelphia

/beige-book-reports/2010/2010-04-ph

"Beige Book Report: Philadelphia\nApril 14, 2010\nEconomic activity moved up somewhat in the Third District since the last Beige Book, on balance, although the advance did not include all sectors. Manufacturers, on balance, reported increases in shipments and new orders. Retailers generally posted gains from February to March. Motor vehicle dealers indicated that sales increased. Third District banks reported steady to slightly decreased loan volume outstanding. Residential real estate agents and homebuilders said home sales increased from February to March. Nonresidential real estate leasing and construction activity continued to be weak, but contacts reported some increase in purchase and investment activity. Business firms in the region indicated that prices of most goods and services have been steady, although there were increased reports of rising prices for basic materials and construction-related products.\nThe outlook among Third District business contacts is that business activity will continue to move up slowly in most sectors in the months ahead. Manufacturers forecast a rise in shipments and orders during the next six months, on balance. Retailers expect sales to expand modestly as consumer confidence is slowly restored. Auto dealers expect the sales rate to remain above last year's pace. Bankers expect slight increases in lending. Residential real estate contacts expect home sales to rise somewhat during the balance of the year, but they are unsure of the immediate trend after the expiration of the federal tax credit for homebuyers. Contacts in nonresidential real estate expect leasing to advance slightly as tenants take advantage of concessions and lower rents, but they do not expect much growth in demand for commercial space until firms begin to add workers in substantial numbers.\nManufacturing\nThird District manufacturers reported increases in shipments and new orders in March, on balance, although the number of firms recording gains was not as large as it was in February. However, most of the major manufacturing industries in the region posted net increases. In general, manufacturers indicated that demand for their products was picking up slowly. One said, \"Business is better than a year ago, but not exciting,\" and another said, \"There is a slow, steady gain.\"\nThird District manufacturers who were queried in March expect business conditions to improve during the next six months, on balance, and the level of optimism has been practically unchanged from last month. Among the firms surveyed in March, about half expect increases in new orders and shipments; about one-tenth expect decreases. Capital spending plans among area manufacturers remain positive, on balance, but have weakened since the last Beige Book. About one-fifth of the firms polled in March plan to increase expenditures for new plant and equipment, although two-thirds plan to maintain level spending.\nRetail\nThird District retailers reported slight gains in sales in March compared with February and with March of last year. They generally indicated that spring apparel sales were moving up in line with expectations. Some retailers also noted that sales of housewares and home furnishings had risen recently, and one store executive said this increase \"shows consumers are more willing to spend, although they are still being cautious.\" Looking ahead, Third District retailers expect modest year-over-year increases in sales for the spring season, although they point out that the gain will be from a low sales level a year ago.\nThird District auto dealers reported an improved pace of sales in March compared with February. They said inventories remained well under control. Dealers expect sales to continue to move up through the spring, and they also anticipate that some domestic franchises that had been discontinued will be restored in the months ahead. In general, dealers are maintaining their expectations that total sales for this year will be slightly ahead of last year.\nFinance\nTotal outstanding loan volume at most of the Third District banks contacted for this report has been level or has declined slightly since the last Beige Book. On balance, commercial bank lending officers said there has been a small increase in consumer lending, although some bankers noted an increase in paydowns and payoffs. Bankers generally reported declines in most other credit categories. Most of the surveyed banks indicated that credit quality measures showed little change since the last Beige Book.\nLooking ahead, Third District bankers expect some growth in lending. They expect gains in consumer lending and lending to businesses. Several bankers indicated they plan to step up business lending, but only to borrowers \"with a sound income stream,\" as one contact said. Some bankers also said they expected commercial real estate lending and lending for construction to begin to rise. Bankers noted that commercial real estate funding by both banks and nonbank financial institutions was starting to become more available.\nReal Estate and Construction\nSales of new and existing homes picked up somewhat in March after falling in February. Sales continued to be stronger in the lower- and moderate-price segments of the market for both new and existing homes. Real estate agents said the inventory of homes listed for sale remained elevated, and sales prices have been steady or declining across the region. Local real estate agents and homebuilders said it was difficult to determine whether the recent increase in sales was the result of buyers signing contracts to take advantage of the federal tax credit before its April expiration or whether the upturn reflected a more fundamental seasonal increase. However, the general view among Third District real estate contacts is that any improvement in home sales during the rest of the year will be modest. As one contact commented, \"We have hit the bottom, but now people are only going to buy if they need to.\"\nNonresidential real estate firms indicated that leasing and construction activity remained slow. Contacts reported that vacancy rates have been about steady for most types of commercial property since the last Beige Book, although vacancy rates for some retail centers have risen. Effective rents continued to be under downward pressure as landlords make concessions to keep existing tenants and attract new ones. Contacts expect nonresidential real estate markets to remain weak as long as tenants are unwilling to expand. One contact said, \"The office market will suffer until employment returns to more normal levels.\" However, some contacts said they believe investor interest in purchasing or financing commercial property was beginning to increase because expected returns to real estate investment appeared to be rising relative to other investment classes. Additionally, some contacts noted that the decline in property values in the past year has prompted some tenants to purchase the buildings they occupy.\nPrices\nReports on input costs and output prices have been mixed since the last Beige Book. Around one-third of the manufacturing firms polled in March noted increases in the costs of the commodities they use, and around two-thirds reported steady input costs. Most continued to report that they have not raised the prices of the products they make, although some producers of food products and metals have raised prices. Construction firms noted recent increases in the costs of lumber, drywall, metal products, oil-based products, and some glass products. Retailers reported mostly flat selling prices.\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 14, 2010\nEconomic activity in the Seventh District improved in March, and contacts indicated that consumer and business confidence were on the rise. Manufacturing continued to lead the way, while consumer and business spending also increased and credit conditions improved. Construction, however, remained weak. Price pressures were small on balance. The spring weather resulted in good progress toward normal planting conditions.\nConsumer spending\nConsumer spending increased in March. Retail sales continued to improve, with the rate of increase accelerating some in late March. As in the previous reporting period, the strongest performance was for sales of nondurables and necessities with some improvement in sales of durable and luxury goods. Auto sales increased substantially in recent weeks. Dealers noted an increase in showroom traffic as more serious buyers were being lured in by favorable pricing and credit terms. Furthermore, dealers also reported that new incentives from Toyota were helping to offset some of the decline in their sales in February. The pace of tourism activity increased slightly with hotel occupancy rates rising due in part to cuts in daily rates, especially at luxury hotels.\nBusiness spending\nBusiness spending also increased from the previous reporting period. Contacts indicated that with overall inventory levels still relatively low, some inventory rebuilding was occurring in retail trade as well as manufacturing. In a further sign of rising business confidence, capital expenditures on equipment and merger and acquisition activity were also noted to have increased. Labor market conditions improved slightly from the previous reporting period. Several manufacturing contacts added overtime or additional shifts, and were beginning to consider adding more employees with business conditions continuing to improve. Demand also continued to be strong for temporary workers with a large staffing firm reporting that billable hours had increased substantially. Some permanent hiring was noted in manufacturing and retail trade; however, in general, hiring remained limited with many firms still wary of adding employees.\nConstruction and Real estate\nConstruction activity remained weak in March. Residential construction was limited, and contacts noted downward pricing pressure as builders continued to try to compete against short sales and foreclosures in the resale market. Credit was still tight for developers; but a few smaller builders reported that they had been able to secure financing for homes that were expected to be occupied immediately. Demand for single-family homes increased some in recent weeks with more purchase contracts being signed before the expected expiration of the homebuyer tax credit in April. Demand remained weak for nonresidential construction. The overhang of vacant facilities and excess retail space dampened demand for new commercial and industrial construction, and contacts reported continued downward pressure on commercial rents. Credit conditions were also still tight for commercial real estate, although a contact cited very slight improvement in credit availability in recent weeks for higher quality properties.\nManufacturing\nManufacturing picked up in March, and contacts indicated business confidence was on the rise. Orders increased, particularly in recent weeks, stemming in part from the restocking of inventories. Contacts also reported that production schedules were beginning to firm into the second half of 2010 and viewed this as a sign that some pent-up demand was being released now that the economic outlook was improving and less uncertain. The auto industry remained a strong source of growth, as did the pharmaceutical, mining, and energy sectors. Activity in the steel industry continued to improve, and a contact noted that they were having a hard time meeting demand with the capacity currently on-line. Export activity also remained strong with developing countries providing a boost to demand. In contrast, business conditions for manufacturers with strong ties to construction were weaker, although a contact did note a small increase in the demand for construction equipment. Credit availability for suppliers and distributors remained a concern for manufacturers, with contacts noting an increase in requests to extend payment periods beyond the customary 30 days. Several contacts did indicate, however, that bank credit seemed to be more available now than in the recent past.\nBanking and Finance\nCredit conditions improved from the previous reporting period. Banking contacts again reported improvement in consumer and business loan quality, although credit quality for many smaller firms continued to decline. The pipeline for new loans was still relatively weak. Many upper middle market firms were said to be making due with cash reserves, holding back on borrowing. However, contacts indicated that this may change going into the second half of 2010 as some higher quality borrowers were already beginning to make inquiries now that economic conditions were improving. Credit spreads narrowed for a number of District firms, and volatility declined across financial markets. In addition, contacts reported that liquidity continued to improve. An exception was the repo market where volume was still very low and bid-ask spreads wide by historical comparisons.\nPrices and Costs\nPrice pressures were small on balance in March. Contacts indicated upward pressure on prices for plywood, industrial metals, and petroleum-based fuels, although natural gas prices remained at historically low levels. In contrast, retailers reported no significant change in wholesale prices. Wage pressures were minimal. However, an increase in healthcare costs was noted. Pass-through of cost pressures to downstream prices was limited.\nAgriculture\nThe District should have normal planting progress this year, as field conditions were better in March than contacts had anticipated previously. Snow cover melted gradually enough and rains were spaced out enough to avoid major flooding in the District. Farmers in most areas started catching up on field work that was left undone last fall, especially fertilizer applications. There was also harvesting of fields left standing over the winter. Blending together poor and better quality corn minimized problems with the feeding and storing of corn, but some farmers were still stuck with lower quality corn. More acres of corn and soybeans were expected to be planted than a year ago, as fewer acres of wheat were planted. Corn and soybean prices were up slightly during the reporting period, while wheat prices declined. Hog and cattle prices increased, but milk prices decreased.\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 14, 2010\nPrepared at the Federal Reserve Bank of Minneapolis and based on information collected before April 5, 2010. 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 somewhat since the last report across all Federal Reserve Districts except St. Louis, which reported \"softened\" economic conditions. Districts generally reported increases in retail sales and vehicle sales. Tourism spending was up in a number of Districts. Reports on the services sector were generally mixed. Manufacturing activity increased in all Districts except St. Louis, and new orders were up. Many Districts reported increased activity in housing markets from low levels. Commercial real estate market activity remained very weak in most Districts. Activity in the banking and finance sector was mixed in a number of Districts, as loan volumes and credit quality decreased. Agricultural conditions were mixed as well, with positive conditions reported in Districts from the central and western parts of the country, while negative conditions were reported in the mid and southern Atlantic Districts. Mining and energy production and exploration increased for metals, oil and wind.\nWhile labor markets generally remained weak, some hiring activity was evident, particularly for temporary staff. Wage pressures were characterized as minimal or contained. Retail prices generally remained level, but some input prices increased.\nConsumer Spending and Tourism\nDistrict reports indicated that consumer spending increased during the reporting period. New York and Cleveland reported that recent sales strengthened, while sales rebounded in Richmond and Kansas City. Slight sales gains were reported in Philadelphia. Retail sales in San Francisco continued to improve, but remained somewhat sluggish on net. In St. Louis several new establishments opened, particularly in the food industry. Several Districts described consumers as somewhat more confident. Businesses were cautiously optimistic regarding future sales: Cleveland, Atlanta, Kansas City and Dallas noted that retailers expect sales to improve during the upcoming months. Sales of home furnishings and electronic goods increased in a number of Districts, while seasonal apparel sales were up in New York, Philadelphia and Kansas City. New York and Minneapolis noted that shopping by Canadians was strong at businesses near the border. Atlanta reported that retailers continued to keep inventory levels lower than normal, and retailers in New York reported that inventories are in very good shape.\nVehicle sales improved in a number of Districts during March. New York, Philadelphia, Atlanta, Chicago, St. Louis, Minneapolis, Dallas and San Francisco noted that auto sales picked up in recent weeks. Cleveland described sales as decent, while sales were steady in Kansas City and mixed in Richmond. Several Districts noted that favorable pricing and credit terms helped lure buyers into showrooms. Dealers in Philadelphia indicated that they expect sales to increase during the next few months.\nTourism conditions also improved during the reporting period. New York, Richmond, Chicago, Minneapolis, Kansas City, Dallas and San Francisco pointed to signs of increased tourism activity. Tourism was described as stable in most parts of the Atlanta District. Hotel occupancy rates were rising in New York, Chicago, Kansas City, and San Francisco. Reports on room rates were mixed: New York and Kansas City noted increases, while Chicago reported rate cuts, particularly at luxury hotels. Managers at mountain resorts in the Richmond District reported that this winter was one of their best ski seasons ever. However, Atlanta noted that corporate bookings remained at very low levels at some high-end resorts.\nNonfinancial Services\nBusiness services were mixed, with some signs of economic recovery. Boston and Minneapolis reported increased activity. Richmond and Dallas were mixed, while San Francisco said demand remained lackluster. St. Louis reported that the sector continued to decline. Advertising and consulting firms in Boston said demand is up substantially from the first quarter of 2009, while an advertising contact in Richmond and professional media services firms in San Francisco characterized sales as flat at low levels. Dallas reported sluggish demand for nontax-related accounting and legal services. Law firms in Minneapolis specializing in debt collections and bankruptcy saw strong demand, while a Richmond property manager noted a large number of repossessions.\nManufacturing\nManufacturing activity increased since the last report across most of the country, with all Districts other than St. Louis reporting increases in orders, shipments, or production. Boston, Cleveland, Chicago, Dallas and San Francisco reported positive results in metals and fabrication. Cleveland, Richmond, Atlanta and Chicago reported increased auto or auto component production. Boston, Richmond, Dallas, and San Francisco saw increased production in electronic, computers or high-technology goods. Chicago and Minneapolis saw increased production of energy-related products. However, for construction-related goods, Chicago and Dallas reported mixed conditions, Boston reported flat activity and St. Louis reported decreases. Overall, St. Louis saw more plant closures than plant openings.\nBanking and Finance\nBank lending activity was mixed by category in most Districts. Atlanta, St. Louis and Kansas City saw weaker loan demand across categories, while activity in San Francisco was flat at low levels and Dallas said that demand appears to be stabilizing. Demand for consumer credit decreased in New York and increased slightly in Philadelphia. Most banks in Cleveland reported weak consumer loan demand, although a few contacts saw a slight increase due to seasonal factors. Business and industrial loan volumes decreased in Philadelphia, Cleveland and Chicago and were flat in New York. San Francisco noted continued modest gains in venture capital funding.\nCredit standards remained generally unchanged across the nation, while credit quality was mixed. New York, Cleveland and Kansas City reported tighter lending standards for commercial mortgages. In Atlanta several business contacts reported difficulty getting credit. Dallas and San Francisco said standards continued to be tight. New York saw increased delinquency rates for all categories except consumer loans, which were flat. Philadelphia and Richmond saw little change in credit quality, while Cleveland was mixed. Dallas reported that credit quality was either stabilizing or improving, and appeared to have turned a corner. Chicago noted an improvement in consumer and business loan quality, although credit quality for many small firms continued to decline.\nReal Estate and Construction\nResidential real estate activity increased, albeit from low levels, in most Districts, with the exceptions of St. Louis, where it was mixed, and San Francisco, where it was flat. Contacts in Philadelphia, Cleveland and Kansas City expressed concern about whether sales would continue to grow after the expiration of the first-time home buyer tax credit. New York, Kansas City, Dallas and San Francisco noted sluggish sales for high-end homes. Home prices were stable across most Districts, but decreased in parts of the New York and Atlanta Districts. Residential construction activity increased slightly in New York, Atlanta, St. Louis, Minneapolis and Dallas, but remained weak in Cleveland, Chicago and San Francisco.\nCommercial real estate activity was slow across the nation. Notable exceptions were Richmond, which saw an uptick in commercial leasing, and Dallas, where the sector was mixed and might be nearing bottom. In Boston, leasing activity consists largely of renewals, with many renewing tenants leasing less space. Manhattan Class A office rents were down 20 percent to 25 percent year over year. Contacts in Philadelphia, Richmond, Kansas City and Dallas expressed concern that lease concessions from landlords were putting downward pressure on rents. Commercial construction continued to be weak in most Districts. Cleveland saw some development in the energy and industrial segments.\nAgriculture and Natural Resources\nDistricts reported mixed results in agriculture. Atlanta reported that cold weather negatively affected crop conditions. Richmond, Kansas City, and Dallas noted that wet conditions delayed planting, though Dallas also commented that current soil moisture levels will be beneficial for the growing season. Chicago expected a normal planting schedule. Minneapolis and San Francisco indicated favorable weather conditions. The calving season is doing well in the Minneapolis District, but Chicago and Minneapolis noted softening dairy output prices.\nActivity in the energy and mining sectors increased since the last report. Philadelphia, Atlanta, Minneapolis, Kansas City, Dallas and San Francisco saw increases in oil exploration. Coal production was mixed in the Philadelphia District and increased in the Kansas City District. In the Minneapolis District, more wind energy projects are planned, and mining activity increased.\nEmployment, Wages, and Prices\nWhile overall labor markets remained weak, some hiring activity was evident, particularly for temporary staff. Employment in the manufacturing and services sectors in Boston remained relatively unchanged, while very little hiring occurred at major legal and financial firms in New York. In the Richmond District, job cuts subsided at retail businesses, and employment was stable at most other services firms. In Kansas City overall employment levels held steady, but more manufacturers and several energy-related firms planned to increase payrolls. Cleveland, Richmond, Atlanta, and Chicago reported strong demand for temporary workers. A pickup in employment was noted in the manufacturing sector by Cleveland, with little change in staffing for retail, energy, transportation and banking. Atlanta noted that many businesses continued to increase hours worked for existing staff. Minneapolis reported that while labor markets remained weak, some signs of hiring were noted.\nWage pressures were characterized as minimal or contained. In Boston, most firms reported instituting or planning to institute modest wage increases of 2 percent to 3 percent in 2010, while performance bonuses in the services sector were generally down. Richmond reported that average wages edged higher in March in the services sector, but declined slightly in manufacturing. Most companies hiring new workers in the Kansas City District were not offering higher salaries to attract qualified applicants. Dallas reported that just a handful of firms were planning on partially reinstating employer matches to retirement plans or giving small pay increases. In Chicago wage pressures were minimal; however, an increase in health-care costs was noted. San Francisco also reported significant increases in the costs of employee benefits, such as health insurance and pensions.\nRetail prices generally remained level, but some input prices increased. Where producers faced cost pressures on inputs, they were largely unable to pass those prices downstream to selling prices, although in Kansas City some manufacturers were considering raising selling prices due to higher raw materials costs. In Boston retail vendor and selling prices were stable. Philadelphia reported that prices of most goods and services have been steady, although there were increased reports of rising prices for basic materials and construction-related products. Apart from rising prices for steel and petroleum-based products in Cleveland, raw materials and product pricing were generally stable. Richmond noted moderate price increases in the manufacturing and services sectors. Chicago reported upward pressure on prices for plywood, industrial metals and petroleum-based fuels. In the Dallas District prices of chemicals and related products rose sharply, primarily due to plant outages. Natural gas prices slipped during the reporting period because of continued high levels of production, low industrial demand and the end of the winter season. Richmond and San Francisco reported increased overseas shipping costs.\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 14, 2010\nEconomic activity in the Twelfth District continued to improve modestly during the reporting period of late February into early April. Upward price pressures were quite limited, and upward wage pressures were largely absent. Sales of retail items and services remained somewhat sluggish, but both continued to show signs of improved demand. District manufacturing activity firmed a bit further, with improvement noted even in the sectors that have been among the most troubled, such as metal fabrication and wood products. Sales continued to expand for agricultural products, while demand for energy resources was mixed. Housing demand appeared to be little changed from the previous period, but conditions in commercial real estate eroded a bit further on net. Contacts from financial institutions reported largely stable lending activity and further declines in credit quality.\nWages and Prices\nUpward price pressures were limited on net during the reporting period. The prices of oil and selected industrial commodities such as steel rose. Contacts also reported price increases for transportation services, notably for transpacific shipping. More generally, however, contacts in various sectors noted that final prices for a wide variety of retail items and services continued to be held down by weak demand.\nUpward wage pressures remained largely nonexistent, although businesses continued to report significant increases in the costs of employee benefits, such as health insurance and pensions. High levels of unemployment throughout the District kept wage pressures to a minimum, and contacts noted continuing work furloughs and hiring freezes in some sectors. Rising reliance on temporary workers in some sectors put additional downward pressure on wages for permanent employees.\nRetail Trade and Services\nSales of retail items continued to improve but remained somewhat sluggish on net. Discount chains and traditional department stores reported further sales gains, and although consumers continued to focus their purchases on necessities, a few contacts pointed to increases in discretionary spending. Retailers of furniture, appliances, and electronic items noted improved sales. Demand remained strong for grocers, although contacts reported disruptions in supplies of fresh produce caused by the earthquake in Chile. Sales of new automobiles firmed somewhat as dealers stepped up their promotional activities. Sales of used automobiles rose strongly, but contacts noted that limited supply and rising prices may restrain sales going forward. Contacts in general expect consumer spending to strengthen further in the second quarter of 2010.\nDemand for services remained lackluster overall but showed further signs of improvement on balance. Contacts in the restaurant and food services industry noted modest increases in demand. For providers of professional and media services, sales were largely stable at low levels, although they rose slightly for some categories. Energy utilities reported increased demand from households and from businesses in selected industries, notably large retail establishments and firms in the technology, health services, and lodging sectors. Conditions improved a bit further in the tourism and leisure sector: contacts in the Southern California and Seattle markets noted recent increases in hotel occupancy rates, while contacts in Hawaii and Las Vegas saw additional increases in visitor volumes.\nManufacturing\nDistrict manufacturing activity continued to improve during the reporting period of late February into early April. Demand strengthened further for manufacturers of semiconductors and other technology products, with reports pointing to rising sales and high levels of capacity utilization. New orders remained limited for makers of commercial aircraft and parts, but existing order backlogs generally held production rates at or near capacity. Demand improved modestly for struggling companies in the metal fabrication and wood products sectors, although capacity utilization remained at extremely low levels. Activity at petroleum refineries remained well below the five-year average levels, as producers worked down excess inventories arising from weak demand for gasoline.\nAgriculture and Resource-related Industries\nDemand remained strong for agricultural producers but was mixed for providers of natural resources used for energy production. Sales rose further for assorted crops and livestock products. Agricultural contacts indicated no changes in the availability of key inputs, and favorable weather in many parts of the District continued to enhance production conditions for a range of agricultural products. Oil extraction activity remained at relatively low levels but rose somewhat during the reporting period in response to modest increases in global demand, while demand for natural gas fell as a result of warmer weather but otherwise showed scattered signs of firming.\nReal Estate and Construction\nHousing demand in the District appeared to be largely stable on net, while demand for commercial real estate continued to slide. The pace of home sales remained mixed across areas but appeared largely stable overall, while home prices edged up further in some parts of the District. However, contacts noted that continued limitations on the availability of nonconforming \"jumbo\" loans have restrained sales of higher-priced homes in some areas. Conditions deteriorated further in commercial real estate markets, as vacancy rates for office and industrial space rose in many parts of the District. However, one contact reported continued improvements in leasing activity for some market segments in parts of the District, along with increased availability of financing for commercial real estate transactions. Regarding near-term expectations, contacts in general anticipate that demand for housing in the District will improve modestly in the second quarter of 2010, while a majority expects no improvement in demand for commercial real estate in the second quarter.\nFinancial Institutions\nDistrict banking contacts reported that loan demand was largely stable or up slightly compared with previous reporting periods. Consumer loan demand remained weak overall, and commercial and industrial loan volumes continued to be restrained by businesses' cautious attitudes towards capital spending. However, scattered reports indicated a small pickup in commercial and industrial loan demand stemming from selected businesses that are planning to replace worn equipment and rebuild inventories. Lending standards continued to be relatively restrictive for consumer and business lending, and banks reported additional loan losses. Further modest gains in levels of venture capital funding were noted.\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 14, 2010\nThe Second District's economy has strengthened noticeably since the last report, though hiring remains sluggish; price pressures have increased moderately but prices at the consumer level remain stable. Manufacturing-sector contacts report improved activity. Auto dealers note some pickup in sales in March, following a lull in February, while general merchandise retailers report improving sales in both months. Tourism activity in New York City has strengthened further since the last report. Commercial real estate markets have been steady to slacker. Residential real estate markets, though still sluggish, have shown scattered signs of improvement, especially at the lower end of the market. Bankers report steady to weaker loan demand, higher delinquency rates (except on consumer loans), and tighter credit standards.\nConsumer Spending\nRetailers report further strengthening in sales since the last report. Contacts report that general merchandise sales were on or ahead of plan in February and March, with year-over year gains in comparable-store sales running as high as 10 to 13 percent in March. While part of this strength was attributed to the earlier occurrence of Easter this year, most of it was ascribed to underlying strength in demand and rising consumer confidence. One large mall in the Buffalo area also notes strong spending by Canadian shoppers. While the strength in sales is reported to be fairly broad-based, a major retail chain notes particular strength in sales of seasonal apparel and big-ticket goods for the home. Inventories are reported to be in very good shape, and a number of retailers say they are discounting less heavily. Auto dealers report that sales remained sluggish in February but picked up noticeably in March. Credit conditions for car buyers have continued to improve, though floor-plan credit (for dealers) remains tight. Revenues from dealers' service departments are said to be doing relatively well. Contacts are generally optimistic about the outlook for the rest of 2010.\nTourism activity in New York City has continued to strengthen since the last report. Manhattan hotels report that business was relatively brisk in February and that preliminary indications for March show even more strength: occupancy rates have risen steadily and are estimated to be up 8 percentage points from a year earlier in March, despite an increase in the overall number of hotel rooms. Total revenue per room, which had been down more than 10 percent from a year earlier in late 2009, was estimated to be up 6 percent in March. Similarly, Broadway theaters report a noticeable pickup in business since the last report, following a weather-related lull in early February: March revenues were up 16 percent from a year earlier, while attendance rose 9 percent. Separately, The Conference Board reports that consumer confidence among residents of the Middle Atlantic states (NY, NJ, Pa) slipped in February but rebounded in March, to just below a two year high.\nConstruction and Real Estate\nHousing markets, though still weak, have shown some signs of improvement since the last report--especially at the lower end of the market. A contact that monitors New Jersey's housing industry notes that single-family building permits, though still sluggish, have picked up in early 2010. New home sales are steady at a depressed level, but resale activity has picked up somewhat. Another real estate contact in northern New Jersey notes that, while sales of homes in the $500K and up range remain sluggish, more moderately priced homes are selling fairly well, sometimes with multiple offers. There are reported to be relatively few distress sales of late. While prices have stopped declining across much of New Jersey, areas near New York City have seen the pace of decline accelerate somewhat. Realtors across New York State report a pickup in both sales and prices in early 2010, though most of the price increases were upstate. Buffalo-area home sales reportedly picked up in February and March, particularly at the lower end of the price spectrum--partly attributed to the extended homebuyer tax credit. Home prices in the Buffalo area were reported to be up more than 10 percent from a year earlier.\nManhattan's housing market remains sluggish, though there are signs of stabilization, especially in the rental market. Co-op and condo sales transactions were reported to have doubled in the first quarter from the depressed levels of a year earlier but were still down modestly from the 4th quarter of 2009. Prices were also down modestly for the quarter and continued to run roughly 20 percent below a year earlier, with milder declines on studio and 1-bedroom apartments but steeper price drops on larger units. Manhattan's apartment rental market showed further signs of stabilizing in March: rents edged up and were down just 1\u00c2\u00bd percent from a year earlier, though vacancy rates rose modestly.\nCommercial real estate markets were steady to softer since the last report. Manhattan's office vacancy rate continued to climb in the first quarter, though at a more subdued pace than in 2009; asking rents for Class A properties continued to run 20-25 percent lower than a year earlier. Still, a contact at a major brokerage firm notes a pickup in leasing activity and sees signs of stabilization in Midtown, though not in Downtown. Looking at the surrounding areas, office vacancy rates continued to drift down in Long Island, were steady in northern New Jersey, but continued to rise in Westchester and Fairfield Counties. Asking rents were down moderately (3 to 6 percent) in these markets. Office vacancy rates in most of upstate New York remain relatively stable--up a bit in the Buffalo and Rochester areas but down modestly in the Albany area. Asking rents are relatively steady in the Buffalo and Albany areas but down 3-8 percent from a year ago in metropolitan Rochester and down more steeply in the Syracuse area. Industrial (factory and warehouse) markets slackened throughout most of the District, with vacancy rates rising and rents falling. A real estate developer in the Buffalo area notes that commercial development and construction are increasingly sparse and that credit remains exceptionally tight.\nOther Business Activity\nA major New York City employment agency reports that activity picked up slightly in March but remains weak--in part, reflecting the holidays in the final week of the month. There continues to be very little hiring activity from major legal and financial firms. Still, a contact in the securities industry notes that layoffs have largely wound down and that some firms are looking to increase staff in regulatory compliance. Cash bonuses have been slashed for highly compensated employees, but some banks have reportedly raised salaries to offset part of the bonus cuts. More generally, the securities industry is reported to be faring relatively well, though there is some concern about the outlook: M&A and IPO activity remain dormant, profits generated by the secondary market are not seen continuing this year, and there remains concern about proposed tax and regulatory issues.\nLooking at business conditions more generally, contacts outside the manufacturing sector continue to describe conditions as stable or rising modestly. However, manufacturing contacts in the District note improved conditions since the last report. A trucking-industry contact reports some pickup in business in recent months, though conditions remain weak. There are scattered reports of shortages of truck drivers--partly due to more stringent requirements for commercial drivers' licenses.\nFinancial Developments\nReports on loan demand were mixed across the consumer and commercial loan groups. Bankers indicate decreased demand in the consumer loan and residential mortgage categories, but little change in demand for commercial mortgages and loans. Bankers also reported decreased demand for refinancing. Respondents indicate a tightening of credit standards in all categories, most notably in the commercial mortgage category. Bankers report no change in the spreads of loan rates over costs of funds, except in the commercial mortgage category, where they report an increase. Respondents indicate widespread decreases in average deposit rates. Finally, respondents note increased delinquency rates for all categories except consumer loans, where they reported no change.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Boston

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"Beige Book Report: Boston\nApril 14, 2010\nBusiness conditions continue to improve in the First District. Contacted retailers cite sales increases, manufacturers say demand continues to grow, and advertising and consulting firms report modest revenue increases. Home prices appear to be improving along with sales in most of the region's residential markets, while commercial real estate appears to be stabilizing although potential defaults remain a concern. Most New England employers are no longer shedding workers, and many are restoring recession-induced cuts in wages and benefits. Both input and selling prices are mostly said to be stable.\nRetail\nContacted retailers in the First District report positive sales results for the early months of 2010; year-over-year same-store sales vary from flat to increases of about 20 percent, with \"improved sales tone\" across the board. Contacts attribute the uptick in sales to strengthening consumer confidence, strong marketing, and having \"the right product and the right price.\" All respondents are cautiously optimistic in their outlook.\nInventory levels are primarily on target, although one contact notes a decrease because of unexpectedly strong sales. Capital spending is more robust than in previous reports, with contacts spending on new store openings, store remodels, IT systems and other technology. Several respondents report slight increases in headcount and the reinstatement of prior wage cuts. Vendor and selling prices are said to be stable, although one contact notes an increase in food-related commodity prices.\nManufacturing and Related Services\nMost manufacturing and related services contacts headquartered in the First District continue to report improving demand for their products in the first quarter of 2010. A furniture maker cites sales increases of more than 20 percent in the first quarter of 2010 relative to a year ago, a metals fabrication business reports similarly robust revenue growth, and business is also strong at a local semi-conductor firm. Overall, the manufacturers serving IT, electronics, and business services industries report the greatest increases in demand. By contrast, firms selling machinery and equipment to industrial customers and those supplying real estate-related sectors, especially commercial real estate development, say that business has stabilized or is improving somewhat, but they expect underlying demand to remain relatively sluggish for the rest of the year. In addition, some firms caution that growth in the first half of 2010 appears strong simply because demand in the first half of 2009 was so weak. There has also been a bounce in growth at some firms from one-time inventory corrections.\nInput costs for manufacturers are generally unchanged, with the exception of most metals, for which prices are rising. Many companies report that they are holding selling prices steady, although a few have managed (or plan) to implement modest increases this year; they face limited pressure to reduce their selling prices.\nThe employment situation in the manufacturing sector remains relatively unchanged. Two notable exceptions are a metals fabrication firm that has increased its workforce about 15 percent relative to a year ago and a large diversified equipment and technology manufacturer that expects to continue layoffs through this year. At most of the remaining firms, hiring in the U.S. is expected to remain relatively flat or increase only slightly for 2010. Manufacturers continue to try to restore wage cuts and/or unfreeze wages. Most firms report instituting or planning to institute modest wage increases of 2 percent to 3 percent this year. Virtually all contacts continue to express concerns regarding rising health care costs.\nMost manufacturing respondents report that their planned capital expenditures for 2010 are level with or slightly greater than their expenditures in 2009. Most of the firms' domestic capital expenditures will go toward expanding IT investment and/or their research and development functions. Respondents commenting on financing conditions say they have improved.\nVirtually all the contacted manufacturing firms remain cautiously optimistic that business conditions will continue to improve as the year progresses. The consensus, however, is that it may take a while for underlying demand to pick up substantially, and 2010 may turn out to be a transition year.\nSelected Business Services\nMost First District advertising and consulting contacts report modest quarter-over-quarter increases in revenue in the first quarter of 2010, although some report flat to slightly negative growth. Nonetheless, all agree that demand is up substantially from the first quarter of 2009, with one firm's growth exceeding 30 percent. As some uncertainties about healthcare reform were lifted, for example, consulting demand from the healthcare sector showed a rapid increase, and this strong growth is expected to continue throughout the year. Consulting demand from private equity firms increased slightly as well.\nMost respondents made large price cuts in 2009, in the range of 10 percent to 20 percent, with only a few holding their prices steady. Now prices are being raised, but they remain below their pre-recession levels. Regarding compensation; some contacts have kept and plan to keep base salaries steady, while others have raised salaries from 2 percent to 10 percent. Performance bonuses are generally down. Most respondents intend to maintain current staff sizes, with only replacement hiring, but a few firms expect to increase headcounts by 2 percent to 15 percent by the end of the year, and one firm plans to further downsize by 5 percent.\nAdvertising and consulting contacts generally say they are cautiously optimistic about the rest of the year, as some uncertainties remain. Most respondents forecast a slow recovery for their industry and project annual revenue growth for their firms between 5 percent and 10 percent, although some expect flat growth. They express concern about the availability of credit and the possibility of a double dip.\nCommercial Real Estate\nCommercial real estate fundamentals in New England have been roughly stable since the last report. In Rhode Island, the uptick in leasing activity seen in January has not been sustained and sales volume remained weak in recent weeks. Nonetheless, our contact notes that vacancy and rental rates in downtown Providence have stabilized. In Boston, leasing activity consists largely of renewals, and renewing tenants continue to give back significant blocks of space. Boston contacts have not seen sizable rent declines in recent weeks, but downward pressure on rents remains significant and tenants are reportedly bargaining hard for improvements and other concessions. However, owners with weak equity positions cannot secure financing for improvements and therefore cannot effectively compete for tenants. Vacancy rates in greater Boston are roughly flat or up slightly since the last report; apartment vacancy rates in Boston have increased less in the current downturn than have vacancy rates for office and industrial properties. In Hartford, the industrial market is currently the weakest sector, with 1.2 million square feet of vacant space added in the first quarter of 2010; fundamentals for office and retail properties were little changed over the same period. While Hartford's commercial real estate market was described as \"stagnant\" overall, consumer sentiment in Connecticut was perceived as improving.\nIn the investment sales market, contacts report growing demand for commercial properties by institutional investors and life insurance companies searching for higher yields. In line with this trend, a commercial real estate lender in Boston has seen significant sales activity for fully-leased, low-risk properties, and his bank has lost bids to other, more aggressive lenders. A local asset management firm recently purchased a prime, mixed-use property in Boston among competition from multiple bidders. At the same time, investor sentiment is reportedly mixed as to whether prices have hit bottom, and significant gaps remain between bidding and asking prices in the riskier segments of the market.\nLooking forward, a few contacts express renewed concern about looming commercial mortgage defaults, as operating incomes and debt-service reserves continue to fall and equity in many properties remains weak. Defaults are expected to rise over the next 12 months and possibly beyond. While most contacts expect leasing volume to rise in the later part of 2010, none expect rents to increase significantly in the near term and one sees little upside risk to rents for at least five years, in Boston at least.\nResidential Real Estate\nResidential real estate markets in New England continued to show mostly positive signs in February. Home sales increased year-over-year in most parts of the region, with 14 percent increases in Maine and Massachusetts. Rhode Island home sales, by contrast, declined slightly year-over-year. Condo sales also increased significantly in Massachusetts and New Hampshire compared to February 2009. Prices also showed signs of stabilization as the median price of homes in February increased modestly year-over-year in Massachusetts, New Hampshire, and Rhode Island, and held steady in Maine. The median condo price in Massachusetts increased 13 percent year-over-year in February.\nWhile Massachusetts contacts are still concerned about low inventory, the 3 percent year-over-year decline in home listings was actually the smallest decrease in 23 months. These contacts hope that sellers will come back to the market as prices rise. Furthermore, the average number of days on market fell sharply across the region. Real estate brokers have been kept busy by the strong demand from buyers encouraged by the tax credit and low prices. Unfortunately, recent flooding in several areas has been a problem for some deals.\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 14, 2010\nThe economy in the Fourth District showed further signs of strengthening since our last report. Manufacturers told us that the rise in production which began late last year continued, although orders remain below pre-recession levels. Contacts in non-residential construction noted some signs of renewed growth, but they are concerned about its sustainability. Financing remains a major issue for residential and commercial contractors. Sales figures from District retailers and auto dealers showed a moderate improvement. Energy production was mixed and reports indicate a continuing upturn in freight transport volume. Demand by businesses and consumers for new loans remains weak, although some bankers noted that the lending environment is starting to grow more competitive.\nA pickup in employment was notable in the manufacturing sector, where businesses are recalling some workers and increasing production hours. A majority of staffing-firm representatives indicated that new job openings increased, primarily in healthcare. Wage pressures continue to be contained. Apart from rising prices for steel and petroleum-based products, raw materials and product pricing was generally stable.\nManufacturing\nReports from District factories showed that production was largely stable or rose slightly during the past six weeks, with a few of our contacts citing an increase in their backlogs. Most manufacturers told us that production levels have increased on a year-over-year basis, though by varying amounts. In general, our respondents are cautiously optimistic and expect their sales to increase at a modest rate going into summer, but they are not expecting a return to pre-recession levels through the end of the year. Steel shipments were better than anticipated, with rising volume being driven primarily by autos, energy, and heavy equipment. Looking forward, many of our steel contacts said that they are uncertain if the rise in volume is sustainable in the long-term. Nonetheless, they expect shipping volume during the next few months to at least approach levels seen in the first quarter. District auto production was stable in February on a month-over-month basis, and showed a substantial rise when comparing year-over-year data for both domestic and foreign nameplates.\nReports on inventories were mixed. Half of our contacts said that product supplies are low relative to demand, while others reported that their inventories remain well balanced. Capacity utilization continued a slow upward trend. Capital outlays are on target, with monies being allocated primarily for maintenance projects, new equipment, or IT upgrades. Manufacturers said that outlays will remain below pre-recession levels until a robust recovery is underway. We heard many reports of increasing steel prices, which were attributed primarily to rising raw materials (iron ore, scrap, and alloys) costs. There was little response on the part of manufacturers to raise their own prices because of relatively weak market conditions. However, some of our respondents are beginning to initiate materials surcharges. We heard numerous reports of recalling laid-off workers and increased work hours, while new hiring was limited to temporaries. Wage pressures are contained.\nReal Estate\nIn general, new home sales improved slightly during the past six weeks and on a year-over-year basis. Nonetheless, some builders are struggling to close sales. Purchases of entry-level homes continue to do well, and several contacts told us that the move-up category is gaining momentum. Builders expressed concern about the potential effect on home sales when the first-time home buyers' tax credit expires and the downward pressure on home prices, which they attributed to unreliable appraisals. They also reported that banks remain unwilling to lend money for constructing spec houses or buying land. Homebuilders are not anticipating a big turnaround in the housing market, and they expect total sales volume in 2010 will equal or be slightly greater than last year's volume. Little change was noted in the list prices of new homes, construction material costs, and subcontractor pricing. General contractors and subcontractors continue to operate with skeleton crews.\nActivity in non-residential construction showed early signs of a pickup. Inquiries have improved, and many contractors said that they are beginning to rebuild their backlogs. Most projects currently under-way fall within the industrial and energy categories. Half of our contacts are uncertain about the level of construction activity for the remainder of 2010, while others see a small improvement when compared to 2009. We continue to hear accounts of difficulties in obtaining project financing, even for credit-worthy borrowers. Increased costs for construction materials were limited to steel and petroleum-based products. General contractors reported that other than seasonal hiring, their employment levels have been flat. Subcontractors are still struggling, with many of them taking on projects at cost.\nConsumer Spending\nFor the period from mid-February through mid-March, retail sales were generally stronger when compared to the previous 30-day period and were up on a year-over-year basis. Although consumers continue to focus on buying necessities over discretionary items, retailers noted that they see a pickup in the sales of home furnishings. Looking forward, retailers are cautiously optimistic, and most expect sales to improve somewhat during the second quarter. Vendor and store pricing has been relatively stable. Retailers commented that they are placing less emphasis on promotions and markdowns, and store inventories continued on the lean side. Auto dealers characterized new vehicle sales from mid-February through mid-March as decent, with little change when compared to year-ago sales. Used-vehicle purchases are holding steady. Overall, sales are expected to show a modest improvement at best during the second quarter. Dealer inventory positions have improved since our last report, though a few dealers still characterize it as light. Several contacts told us that buyer credit is beginning to loosen, as community banks and credit unions are becoming more aggressive. Reports show little change in staffing levels at retailers or auto dealers.\nBanking\nDemand for new business loans remains weak, although a few bankers noted that they are beginning to see their pipelines become more active. Interest rates were steady. Some of our respondents also commented that the lending environment is growing more competitive. On the consumer side, loan demand was mixed. While several bankers said that demand was very weak, others are seeing a slight increase, which they attributed to seasonal factors and draw-downs on HELOCs. The residential mortgage market is stable, with most activity dominated by refinancings. Core deposits continued to show strong growth at most banks. Interest spreads are widening due primarily to term deposit repricing. Credit standards have not changed appreciably in the past six weeks, though commercial real estate lending is receiving closer scrutiny. Reports on the credit quality of loan applicants were mixed. Almost all of our respondents told us that delinquencies have stabilized or declined. Employment growth at banks was limited to some strategic hires.\nEnergy\nLittle change in oil and natural gas output was reported during the past six weeks, with only a slight increase expected during the second quarter. Spot prices for natural gas are on the decline, while oil prices are fluctuating within a narrow range. We heard mixed reports on coal production. One producer noted that demand from off-shore customers for metallurgical coal has increased significantly and that his company is reopening one of its idled mines. Prices for coal were mixed but tended to the upside. In general, capital expenditures showed a modest improvement. Production equipment and materials costs were flat, although we heard some reports that the rise in steel prices is making its way down the supply chain. Employment was steady, and little hiring is expected in the near future. Wage pressures are contained.\nTransportation\nFreight transport executives reported that shipping volume continues to show a gradual improvement, and they expect this trend to persist for the remainder of the year. However, profit margins remain constrained due primarily to overcapacity and rising fuel costs, which have to be absorbed into the current rate structure. Apart from fuel prices, operating costs have been relatively stable, although there is some concern about rising costs associated with regulatory compliance. Equipment purchases remain at low levels, with little change expected until there is a substantial pickup in shipping volume. Hiring was limited to replacement only.\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 14, 2010\nEconomic activity in the Eleventh District firmed up further over the past six weeks. Respondents in high-tech manufacturing, retail, residential real estate, energy and staffing and transportation services cited continued improvement in demand. Conditions in the commercial real estate, financial services and construction-related manufacturing sectors also showed signs of nearing bottom. Although respondents continued to express caution in their outlooks, overall expectations were slightly more optimistic than the last report.\nPrices\nWeak demand, excess capacity and competition continued to put downward pressure on selling prices or fees across several industries, and some contacts noted lowering prices to keep the business. There were reports of an uptick in raw materials prices for steel, fuel, cotton and sugar. Rising raw material costs are squeezing margins as many contacts are unable to pass on these increases to clients.\nCrude oil prices rose from $75 in mid-February to over $80 per barrel in late March. On-highway prices for diesel and gasoline followed suit, rising nearly 20 cents per gallon. Prices of chemicals and related products also rose sharply largely due to plant outages. In contrast, natural gas prices slipped from $5.50 per Mcf to near $4 during the reporting period due to continued high levels of production, low industrial demand and the end of the winter season.\nLabor Market\nEmployment levels held steady at most respondent firms. Layoffs have subsided but most firms are hesitant to hire new employees. On a more positive note, staffing firms continued to cite increased hiring activity, and there were reports from a few high-tech manufacturing, paper and lumber industry respondents that temporary hiring had edged up. A high-tech manufacturer noted opening a new plant, while a large discount chain operator said they were opening new stores and expanding headcount albeit at a much slower pace than before the recession. Additionally, some energy service and transportation manufacturing firms noted an uptick in hiring. Wage pressures were nonexistent, and a handful of firms reported they planned on partially reinstating employer matches to employee 401(k) plans or on giving small pay increases.\nManufacturing\nReports from construction-related manufacturers were mixed, but overall they suggest that activity has bottomed out. Some firms noted that favorable weather in March led to an uptick in orders, while others reported continued weakness. Contacts say that while the \"worst may be over\", they expect a slow recovery in business. Fabricated metals producers cited a sharp rise in orders, and reported a positive sales outlook for the next three months.\nProducers of trailers reported a large increase in orders over the past month, and added that they were building up inventories to better meet customers' needs. Manufacturers of emergency vehicles said growth in orders decelerated over the past six weeks as customers, particularly municipalities, are experiencing a decline in tax revenues. An aircraft components manufacturer reported an uptick in demand but said that orders remained significantly below year-ago levels.\nPaper manufacturing firms cited flat to rising demand. Respondents say conditions have improved relative to last year, but the picture is far from rosy and expectations are for a slow and gradual recovery. Food producers said demand held steady over the past month, and noted a positive sales outlook for the year.\nRespondents in high-tech manufacturing reported that orders continued to accelerate and the book-to-bill ratio was well above one. Contacts say inventories have increased slightly but still remain below desired levels. In an industry where prices typically fall, strong demand has helped stabilize prices. Most respondents are cautiously optimistic that demand will remain solid over the next three to six months.\nPetrochemical producers report that ethylene plant outages have led to large increases in prices for ethylene and other related products such as polyethylene and polyvinyl chloride, which has dampened export demand for these products. Refinery margins remain very weak, and capacity utilization rates are below 80 percent.\nRetail\nRetail sales rose further during the reporting period. Large discount store chains noted an increase in demand especially for electronics and household items, and department store sales were also better than expected. Contacts say although consumers remain cautious, they are regaining confidence and are more willing to spend. Outlooks remain guarded but contacts expect continued improvement in sales throughout the year.\nAutomobile sales rose over the past six weeks, which contacts attributed to improving consumer confidence. Inventories remain lean. Prices are flat but rebates recently introduced by Toyota, have led other automotive manufacturers to follow suit.\nServices\nStaffing firms say orders are streaming in at a solid pace and are well ahead of last year. Demand is still largely for contract work, but direct hire placements are picking up pace. Sustained growth in orders has boosted contacts' assessments of current conditions as well as their near-term outlook. Accounting firms note that demand outside of tax related services remains sluggish. Demand for legal services held relatively flat at low levels, with the exception of a slight uptick in energy-related activity.\nReports from transportation service firms were generally positive. Strong overseas demand pushed up intermodal cargo volumes over the past month. Small parcel shipping firms said a pickup in demand from the professional and business services, manufacturing and nondurable retail sectors led to positive growth in volumes. Railroads reported a modest but broad-based increase in shipments, and noted that the outlook is more upbeat than last time. Airline demand appears to be slowly improving, with leisure travel seeing continued growth and business travel stabilizing. Contacts expect demand for air travel to be steady this year.\nConstruction and Real Estate\nHousing contacts noted more favorable conditions. Builders said sales in the first three months of the year were relatively strong, especially at the low end. Sales of higher priced homes are happening but they are not as widespread. Given the severe cutback in construction in the first quarter of 2009, builders have been pro-active in adding spec homes in hopes of sales and closings before the expiration of the current tax credit. Realtors were encouraged that prices were up slightly and noted the housing market was in the beginnings of a modest rebound. Overall, housing contacts were more positive in their outlooks.\nApartment demand in most Texas markets was \"meaningfully positive,\" according to contacts. New product was leasing well and there were fewer move-outs in older units, consistent with an improving job market. Lower rents were \"doing their job\" and generating positive demand. The exception was Houston, where overall leasing was weaker.\nReports from commercial real estate contacts were mixed, but overall they suggest the sector may be nearing bottom. Declining rental rates have spurred leasing activity in the office and industrial markets. One industrial contact noted that landlords have \"taken a realistic look\" at conditions and are offering drastic reduction in rental rates on renewals. Respondents noted that while absorption had improved, there would be no construction any time soon. Commercial property sales activity picked up from very low levels. Contacts said while the good deals being offered were minimal; there were many interested buyers and lenders. Outlooks for the commercial real estate sector were mixed, with some contacts expecting continued improvement and others anticipating a longer, rocky road ahead.\nFinancial Services\nLoan demand remains soft but appears to be stabilizing. Contacts are seeing more commercial and industrial loan activity in the pipeline as well as some improvement in credit card volumes and consumer loan demand, albeit with more aggressive pricing. Real estate lending is still restricted. Deposit growth has been relatively flat, and lending standards remain tight. Credit quality appears to have turned a corner, and is either stabilizing or improving. Despite a shift towards stabilization and slight optimism, much uncertainty remains around impending regulatory changes, particularly for community banks. Overall, most contacts expect growth in revenues and loan demand to be slightly positive this year.\nEnergy\nThe rig count rose further over the past six weeks. Oil-directed drilling continued to be boosted by rising oil prices. Contacts say the increase in gas-directed drilling is not justifiable at current low prices, but firms are drilling based on futures prices locked in earlier, to hold leases and to learn the shale technology. There is concern that gas-directed drilling will decline in the second half of the year. Demand for oil and gas services and equipment continues to grow with the rig count.\nAgriculture\nWet weather continues to boost pasture growth. It has, however, delayed spring planting in some areas, which may lead producers to shift away from corn in favor of crops with shorter planting seasons such as cotton and grain sorghum. Net farm income is expected to be higher in 2010 compared with last year but below the ten-year average.\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 14, 2010\nEconomic activity improved across the Fifth District since our last assessment. Retail sales improved, despite weak sales of big-ticket items. Manufacturing activity continued to advance, as evidenced by further increases in shipments and orders. House sales showed some improvement, although prices continued to edge downward, and commercial leasing also experienced a slight uptick over the last six weeks. Tourist activity improved, with bookings showing moderate strength at both mountain and coastal resorts. While activity in both the service and banking sectors remained mixed, positive reports were more prevalent than in our last assessment. Labor markets were weak throughout the District, with steady employment in manufacturing and falling employment on the retail side of the service sector. Moderate price increases were reported in both manufacturing and service sectors. Finally, excessive dampness delayed the planting of crops in most areas of the District.\nRetail\nRetail sales rebounded since our last report, owing in part to a slower decline in big-ticket sales. The store manager at a central North Carolina chain department store said sales were \"coming out of the doldrums,\" and Easter sales were especially strong this year. Weakness in big-ticket sales was mitigated by early tax refunds, as consumers bought furniture and flat screen televisions. Also, as the unusually snowy winter ended, sales of seasonal outdoor items such as lawn mowers, improved. A contact at a Washington, D.C., beltway department store reported that sales were 6 percent above a year ago and that his counterparts at local mall stores also saw improved sales growth in recent weeks. The pace of District grocery sales rose in recent weeks, although a Virginia food distributor noted rapid increases in input prices for many product categories. Sales of automobiles and light trucks were mixed; in the Carolinas and West Virginia, dealers reported stronger business, while sales remained tepid elsewhere in the District. In contrast, a few contacts were less confident \u00e2\u20ac\u201c a retailer in West Virginia told us that customers remained cautious about spending. Retail prices edged up slightly since our last report.\nServices\nReports from non-retail services firms were mixed. A contact at an advertising business reported, \"We expect to bounce along the bottom for some time,\" and an executive at a North Carolina property management business said, \"The repo man is busy.\" While a hospital in the Piedmont area cut employees, blaming the weak economy, another North Carolina hospital executive said previously planned capital projects were going forward. In addition, professional, scientific, and technical firms across the District indicated that business had picked up in recent weeks. Price change at services-providing firms was virtually flat.\nManufacturing\nDistrict manufacturing advanced somewhat faster since our last report. A majority of the contacts reported that shipments posted gains and new orders continued to increase, while employment stabilized. A producer of electronic components reported that his company had seen a nice order \"bump\" in March, providing a strong order backlog going into April. Moreover, a manufacturer of door components noted an unusual confluence of events currently driving his business. \"The earthquake in Chile and subsequent halt on shipment of products from that country has resulted in a sharp run-up of demand for domestically produced wood products, with pricing escalating dramatically as well.\" Similarly, a ball bearings manufacturer indicated that demand from the automotive industry continued to be very strong, but noted that steel pricing was growing at an alarming rate and freight costs, particularly on ocean freight, were up dramatically. Accordingly, most contacts reported that both raw materials and finished goods prices increased at a quicker pace since our last report.\nPort activity over the last few months was up slightly. Both imports and exports posted moderate gains, although exports tended to outperform import gains. While the dollar was seen as a contributing factor, most contacts attributed gains in exports primarily to improvements in overseas markets. One contact stated that exports would have been even stronger if the right mix of containers had been available. However, shipping costs increased in recent months, which discouraged some companies from exporting. One contact also reported that total tonnage so far this year was down from the fourth quarter of last year, partly due to adverse weather that prevented producers from getting their goods to the docks.\nFinance\nBanking activity was generally mixed, but with more signs of improvements than in our last assessment. On the commercial and industrial side, weak loan demand prevailed in most local markets, although several bankers reported modest improvements. Upticks in loans for new equipment, especially upgrades by professional services, were also noted, and one banker cited an increase in SBA loans. Auto dealers, however, continued to struggle to get floor-plan financing, and construction loans were down. On the mortgage side, reports of loan demand varied between no change and modest increases. Refinancing activity was important in some markets, but rising mortgage rates were curtailing refinancing in others. First-time buyers continued to dominate loan applications. One banker reported an increase in lending on foreclosed homes, and added that very few home loan applications were for upgrades. Credit quality was little changed in recent months, and banks were about evenly split between reporting increases and decreases in delinquent payments.\nReal Estate\nResidential Realtors in the District gave generally upbeat reports on house sales. While the tax credit program remained the single most important motivating factor, one Realtor told us that sales over the past three months had outweighed all of his 2009 sales and that only 18-20 percent of the buyers had taken advantage of the tax credit. House prices were mixed across the District. For example, prices rose in Fairfax and Greensboro, held steady in Greenville, and were relatively flat in Richmond. Notable decreases in prices were reported in Washington, D.C., where a significant increase in sales of lower-priced properties were reported, and in Fredericksburg, where a Realtor stated that, \"banks seem to be willing to take anything within reason to reduce their holdings of foreclosed properties.\"\nCommercial real estate activity picked up slightly since our last report. Most contacts generally reported an uptick in leasing activity, particularly in the office and industrial sectors, while activity in the retail sector remained sluggish. Effective rental rates decreased somewhat as landlords became more aggressive in offering concessions. Vacancy rates were generally high, although vacancy rates in some local markets did improve. Sales activity continued to be hampered by stringent bank requirements and a scarcity of creditworthy buyers. However, one contact reported that property sales increased somewhat due to foreclosed properties being purchased at very low prices. While contacts reported very little new construction over the past few weeks, some activity was reported on the industrial side for some build-to-suit projects and some bidders continued to submit proposals at low or no profit just to keep their doors open.\nTourism\nAssessments of tourist activity improved somewhat since our last report. Along the coast, contacts noted somewhat stronger bookings, compared to our last survey. An analyst on the Outer Banks of North Carolina said that bookings for the Easter weekend were looking good with advanced rentals up 10 percent over last year. A manager from Myrtle Beach indicated that last-minute bookings had picked up, which he attributed to the recent warm weather and steep discounts on special packages at most hotels. Managers at mountain resorts throughout the District reported one of their best ski seasons ever--both in terms of business activity and revenues--and mentioned that vacationers were booking early and staying close to home. Finally, the 98th annual National Cherry Blossom Festival in Washington, D.C., is off to a good start and is expected to attract record crowds.\nLabor Market\nFifth District labor markets remained soft over the past several weeks, but declines in some sectors eased. Job cuts subsided at retail businesses, and employment was unchanged at most other services firms as well as in manufacturing. A West Virginia automobile dealer increased hiring, and a retailer reported that he was only replacing workers, but continued to give raises. Average wages edged higher in March in the service sector, but declined slightly in manufacturing. Contacts at temporary employment agencies reported generally stronger demand for temporary help since our last report. Reports from some agency clients indicated that, while they saw an increase in business, they remained unsure how long it would last and opted to continue using contingent labor. However, one temporary agency reported that clients were now filling positions that had been eliminated at the depth of the economic downturn.\nAgriculture\nAlthough drier weather prevailed in recent weeks, wet fields continued to hinder plantings and field preparation in many areas of the District. Indications of delayed fertilization of winter grains and forage seeding were evident in some areas. In Virginia, grain farmers attempted to fertilize their wheat and barley fields, but were forced to wait for drier weather. In addition, hay was still being fed to livestock in many areas of the state. Nevertheless, winter wheat was reported to be in mostly fair-to-good condition in South Carolina and West Virginia. In addition, drier weather during the first week of April allowed farmers in South Carolina to plant corn at a rapid pace. Finally, results of our recent survey of agricultural credit conditions indicated that farmland values were above 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"

St Louis

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"Beige Book Report: St Louis\nApril 14, 2010\nEconomic conditions in the Eighth District softened in most sectors since our previous report. Manufacturing activity declined on balance, as did activity in the services sector. Although residential real estate markets remained weak, home sales and issuance of construction permits increased in some metropolitan areas of the District. Activity in the commercial and industrial real estate markets, construction in particular, remained weak throughout the District. Overall lending activity at a sample of small and mid-sized District banks decreased slightly in the first quarter of 2010 compared with the fourth quarter of 2009.\nManufacturing and Other Business Activity\nManufacturing activity declined since our previous report. Contacts reported more plant closures and job layoffs than plant openings and new hires. Several manufacturers reported plans to consolidate operations and lay off employees, including firms in the appliance; heating, ventilation, and air conditioning; steel; and machinery manufacturing industries. Furthermore, firms in the construction materials, auto parts, and food and beverage manufacturing industries announced plans to close a plant in the District. In contrast, a major firm in defense goods manufacturing announced plans to add new jobs and expand production. Several small firms in food and beverage manufacturing and metal products manufacturing announced plans to expand operations and hire new workers.\nThe District's services sector also continued to decline despite the increase in temporary employment from the 2010 Census. Several regional government agencies and education services providers announced job cuts in response to declining budgets. A major firm in print and publishing services announced it will close a facility in the District. A large medical services provider also announced significant job cuts to achieve operational efficiencies. In contrast, a large regional transportation authority was awarded a major contract from the Department of Transportation, and a firm in business support services announced plans to hire new workers. Contacts in the retail sector noted the opening of several new establishments, particularly in the food industry. A major trade show also signed a long-term lease with a metropolitan area in the District. An auto dealer noted stronger than expected demand, particularly for light sport utility vehicles.\nReal Estate and Construction\nHome sales were mixed in the Eighth District. Compared with the same period in 2009, February 2010 year-to-date home sales were down 5 percent in Little Rock and 9 percent in Memphis and St. Louis. Year-to-date home sales in Louisville, however, were up 16 percent for the same period. Residential construction, on the other hand, is improving throughout most of the District. February 2010 year-to-date single-family housing permits increased in most District metro areas compared with the same period in 2009. Permits increased 17 percent in Louisville, 30 percent in Memphis, 41 percent in Little Rock, and 60 percent in St. Louis.\nCommercial real estate and construction markets continued to struggle throughout the District. A contact in St. Louis expects commercial property foreclosures to rise. A contact in Evansville, Indiana, reported that major construction is still slow. A contact in northeast Arkansas noted that the only major construction projects are related to a local university and medical center. Industrial real estate and construction contacts throughout most of the District also continued to report a sluggish environment. A contact in Louisville described the first-quarter industrial real estate market as dismal. A contact in Memphis, however, indicated that industrial real estate may be showing signs of improvement. A contact in St. Louis expects little to no speculative industrial construction to take place in 2010.\nBanking and Finance\nTotal loans outstanding at a sample of small and mid-sized District banks decreased 2.7 percent in the first quarter of 2010 relative to the fourth quarter of 2009. Lending activity in various sectors was mixed, however. Real estate lending, which accounts for 73.6 percent of total loans, decreased 2.3 percent. Commercial and industrial loans, accounting for 16.1 percent of total loans, decreased 4.9 percent. Loans to individuals, accounting for 5.6 percent of loans, increased 3.3 percent. All other loans decreased 8.3 percent. Over this period, total deposits increased 0.6 percent.\nAgriculture and Natural Resources\nTotal winter wheat acreage in the District states in 2010 decreased by 41 percent from 2009 levels, and most of each state's crop was reported to be in fair or good condition. Farmers in the District reported that they expect to plant 5 percent more acres of corn and 10 percent more acres of both cotton and rice in 2010 than in 2009. In contrast, they anticipate planting 6 percent fewer acres of sorghum and 4 percent fewer acres of tobacco than last year. They expect to plant the same number of acres of soybeans as last year.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Richmond

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"Beige Book Report: Richmond\nMarch 3, 2010\nEconomic activity slackened or remained soft across most sectors of the Fifth District's economy since our last assessment. However, severe winter storms throughout the District played an important role. Many consumers avoided driving during dangerous road conditions, causing weakness in retail sales (except for items such as food). One banker noted that even borrowers with pre-approved mortgage loans were unable to do much house shopping during the bad weather. Overall, the residential real estate market activity was generally viewed as mixed, although the commercial markets continued to weaken regardless of weather conditions. Tourism was also mixed, with heavy snows in the mountain areas contributing to booming activity at ski resorts, but keeping vacationers away from most other activities. Many manufacturers lost a few days of production during the storms, but were able to make up most of the lost production. Manufacturing shipments and backlogs, however, were largely unchanged over the last month, while new orders improved. Both manufacturing and service employment fell since our last report, although temporary employment agencies reported slight increases in demand, particularly among service-related occupations.\nRetail\nRetail revenues generally weakened since our last report, although a few merchants reported slightly higher sales. Big-ticket sales dropped sharply, including sales of automobiles and light trucks. Sales fell in many other categories; for example, a department store manager reported that customers were trading down from \"label\" apparel to the in-house brand. In addition, retail sales fell abruptly during recent major snow storms, although some of our contacts indicated that sales rebounded quickly as customers fought \"cabin fever\" by shopping when roads were cleared. However, many retailers were unable to recover lost sales and advertising expenses because those snow storms occurred on consecutive weekends. In contrast, District grocery sales rose, and the store manager at a chain discount retailer in North Carolina reported that sales of larger screen televisions were especially strong just prior to the Super Bowl football game and following the snow storms. Several store managers said their outlook for 2010 was more optimistic than in recent months, stating that raises and bonuses were on the table again after last year's freezes. However, merchants remained cautious in their planning, and inventory levels were being managed tightly. Retail wages rose on average, while price increases slowed.\nServices\nRevenues fell at most District services firms in recent weeks, partly due to snow storms at the end of January and beginning of February. Virginia airports attributed a decline in enplanements to the bad weather, and District hotels and restaurants also reported a drop in customer traffic. In addition, CFO's and other executives at small businesses continued to express frustration at not being able to get loans. Architectural firms in Virginia and Maryland, as well as a few hospitals, reported an increase in consumer demand for services, however. Also, investment advisors and other financial services professionals indicated that revenues picked up in recent weeks, although overall business conditions remained mixed. A financial services contact reported that he was seeing a sense of optimism beginning to develop among his commercial clientele. Average wages inched up at services firms; price increases were mild.\nManufacturing\nDistrict manufacturing activity was flat to up in February, with optimism for the near-term remaining guarded. Contacts on balance reported that shipments and backlogs held steady, while new orders posted solid increases. A textile producer said, \"Business has definitely turned for the better.\" His company, however, was using fewer employees due to increased productivity. Similarly, a textile mill manufacturer reported that sales, production and shipments continued to improve and that business was looking good over the next two months. Moreover, a chemical producer noted that his company had seen an increase in all of his business lines and believed that this increase would be sustainable for the next 18 months. In contrast, a primary metal manufacturer indicated an uptick in demand, but was not convinced that the gains would continue because his backlogs had slacked off recently. Likewise, an apparel producer said that sales had increased because retailers were building inventories. He noted, however, that his company was not increasing wages and was reluctant to hire because he believed present demand was a blip and would not last beyond this summer. Several manufacturers reported production disruptions during the snow storms, but were able to make up the losses by working overtime and during holidays. Although most contacts reported that both raw materials and finished goods prices increased at a slower pace since our last report, lumber prices were higher across the board due to weather-related supply effects.\nFinance\nLending activity in the District remained soft and little changed from our last assessment, although adverse weather in both January and early February was partly to blame. With businesses closed and home buyers reluctant to drive during the extended period of bad weather, especially in the northern half of the District, banks were getting few customers. Yet, even in areas less affected by weather, several bankers described loan demand as tepid. One large bank reported that commercial and industrial lending remained weak across all market lines. Another banker stated that a modest tightening of credit standards was making loan approvals more difficult. Bankers noted that, while businesses were increasingly calling about loans, few were ready to make loan applications due to the sluggishness of the economy. Nonetheless, one large bank did see a \"bit of a thawing\" among businesses that needed to replace capital, and a small bank stated that their one area of increased activity was in home equity loans. Most bankers stated that more improvement in the economy and particularly consumer spending would be necessary before loan demand would strengthen appreciably.\nReal Estate\nFifth District Realtors reported mixed housing activity across the District, citing weather as a limiting factor in many areas. For example, a Greensboro Realtor noted lower sales since our last report, adding that recent weather conditions had \"shut them down.\" Further, he cited the uncertainty of the economy as a big factor in holding down sales, and said this was the worst market he had ever experienced. Likewise, a Charlotte agent stated that, while house sales slowed in recent weeks, months' supply of inventory was also down markedly. However, a Fredericksburg Realtor reported that, in spite of the adverse weather conditions, sales in her market were equal to a year ago and indicated that, absent the weather, there might have been an improvement in market conditions. Several agents reported that home sales in the lower price ranges continued to benefit from first-time homebuyers, although there was also an increase in foreclosures and short sales. Agents in most localities reported that home prices were either flat or had dropped.\nCommercial real estate activity in the District slowed across all segments of the market. Several contacts reported that office, industrial, and retail vacancy rates edged higher, putting more downward pressure on prices and leasing rates. One contact cited an increase in late payments and even defaults. An agent stated that several retail chain stores were having trouble getting financing to sustain their outlet expansion plans. However, local retailers were benefiting from less competition for leasing space in prime locations from national chains. Little or no construction activity was reported in most areas of the District. One exception that was noted included the construction of small industrial buildings such as auto services and parts shops.\nTourism\nTourist activity was mixed, with weather again playing an important role. Contacts along the coast reported weaker bookings and noted that both occupancy and room rates were down considerably when compared to our last report and to a year ago. An analyst on the Outer Banks of North Carolina said that bookings for Valentines' and Presidents' Day weekends were somewhat below a year ago and attributed the weakness to major snowstorms to the north and ongoing concerns regarding the national economy. Looking ahead, however, she noted that rental bookings were up slightly and credited the increase to creative packaging such as throwing in free linens, gas cards and gift certificates to local restaurants. Respondents at ski resorts, however, continued to report that \"business is booming,\" as record-breaking snowfalls resulted in an historically high number of visits. A manager at a ski lodge in Virginia stated that this Presidents' Day weekend had been the busiest in the past five years.\nLabor Markets\nLabor markets generally softened across major sectors in the Fifth District. Employment and hours at manufacturing firms on average continued to decline over the past month, while retail and service-providing industries reduced hiring but increased hours. Employment was held back, according to one manufacturing contact, by productivity improvements initiated earlier in the recession, and another manufacturer stated that temporary layoffs were continuing due to weak demand. However, temporary employment agents reported somewhat stronger demand during January and February than in previous months. One agent cited a slight increase in demand for contract workers in manufacturing, although construction-related suppliers continued to struggle. Most of the gains in temporary hiring were in service-related occupations, such as finance and other professional services.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Boston

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"Beige Book Report: Boston\nMarch 3, 2010\nEconomic conditions continue to show improvement in the First District. Respondents in the manufacturing, software and IT services, staffing, and residential real estate sectors indicate that demand continues to strengthen, with several manufacturing contacts citing better-than-anticipated increases. Commercial real estate markets remain very weak, but respondents say they may be stabilizing. Recession-imposed hiring and pay freezes are being removed and prices are largely steady.\nRetail\nContacted retailers in the First District report mixed sales results for the early months of 2010. Year-over-year same-store sales vary from negative mid single-digits to positive low double-digits. Respondents reporting growth attribute it in part to consumers who continue to seek value-priced products, while contacts with softer sales attribute them in part to recent inclement weather. All retail respondents are cautious in their outlook.\nContacts continue to manage inventory levels carefully, with several retailers reporting decreases from a year earlier. Capital spending remains cautious; a few contacts are considering favorable expansion opportunities and others report plans for store remodels or IT spending. First District retailers tell of increasing headcount in line with new store openings as well as opportunistic hiring of talent. Wages remain mostly steady, although one respondent reports restoring bonuses and merit increases. Vendor and selling prices are said to be stable.\nManufacturing and Related Services\nMost manufacturing and related services contacts headquartered in the First District report that demand continued to strengthen in early 2010, in some cases by more than they had anticipated just a few months earlier. Manufacturers of semiconductors and related equipment report sharp snap-backs in orders, resulting in dramatic increases in backlogs, as well as some component shortages and production bottlenecks. An IT equipment maker indicates that demand continues to be strong in the first quarter, resulting in an ample backlog. A food processing firm also says that it is scrambling to meet customer demands for higher volumes and faster deliveries, while at another consumer goods company, European sales in particular are \"racing back up\" to healthier levels. Biopharmaceutical makers continue to report solid growth in sales. Some other respondents note that their customers remain cautious, but that sales are at least stabilizing after a period of considerable declines.\nAccording to most responding manufacturers, input costs are largely holding steady. Metals prices are the main exception, with some rising and others decreasing. Most contacts are holding selling prices unchanged, except for a few that implemented increases of 2 percent to 3 percent at the beginning of the year. Some respondents note that they or their customers are applying less pressure on vendors to make price concessions as a consequence of a growing emphasis on ensuring reliable deliveries.\nMost contacts plan to hold domestic headcounts relatively steady or increase them somewhat in coming months. Only a few firms are planning staffing reductions in 2010. Net hiring is concentrated on scientific, engineering, and other technical occupations. Manufacturers that had implemented pay cuts have now mostly restored wages and salaries to their previous levels. Almost all respondents that had suspended 401(k) plan matches have resumed making matches or expect to do so shortly. 2010 merit pay increases are expected to be in the range of 3 percent to 3.5 percent at most contacted companies.\nMost manufacturing respondents are planning to increase capital spending in 2010. Many mention that they will be expanding their capacity to perform R&D or produce new products.\nManufacturers and related services providers describe themselves as either hopeful or optimistic about business conditions over the coming six to 12 months. However, contacts in the semiconductor industry express some concern that sales trends could weaken in the second half of 2010, given the unexpectedly vigorous pace of recovery in recent months.\nSoftware and Information Technology Services\nFirst District contacts in the software and information technology sectors largely report increased activity--ranging from slight upticks to significant growth--through the end of Q4 2009 and into Q1 2010; however, a few respondents caution that business conditions remain fragile and unpredictable. Contacts generally report increased demand across the board, including the financial, medical, and government sectors, although some corporate clients remain hesitant to spend money. One contact also notes that pricing pressure from competitors remains aggressive. While some firms have reduced headcount in recent months, others continue to add personnel; however, salary freezes from 2009 have been lifted, with anticipated merit increases generally in the 3-percent to 5-percent range. The outlook among New England software and IT contacts is more positive than in prior months, with 2010 largely expected to be a growth year. Despite these improved expectations, the possibility of a double-dip recession or a slow recovery remains a major concern.\nStaffing Services\nThe majority of New England staffing contacts report that business continues to strengthen, although a few have experienced stagnant or volatile activity over the past three months. Yearly revenues for 2009 were generally 10 percent to 30 percent below 2008 revenues; however revenues continue to rise over-the-quarter. Labor demand has generally increased across industries, with notable improvements in the financial and manufacturing sectors. Increased activity is also reported in the medical, aerospace, and semiconductor industries. While the demand for direct hires remains depressed, several contacts noted increased conversion of temporary workers to permanent status. Labor supply remains plentiful, although candidate skills do not always meet client demand and an elongation of the hiring cycle persists. The downward pressure on bill rates throughout 2009 has lessened, and some applicants are no longer willing to accept lower pay rates. All First District staffing respondents anticipate improvement during 2010, with most expecting growth for the year to be in the 10-percent to 20-percent range.\nCommercial Real Estate\nContacts report modest signs of improvement in commercial real estate markets across the region. In Boston, leasing activity in January and early February, while still light, was up from the preceding quarter as well as year-over-year. However, recent activity has typically involved renewal of existing leases, and renewing tenants, in many cases, gave back space. Net absorption remains slightly negative as increases in vacancy have moderated. Boston's downtown vacancy rate was described as \"a soft 16 \r\npercent\" in the fourth quarter, while the Route-495 corridor is faring much worse, with vacancy rates between 25 and 30 percent. In Boston and Providence alike, renewing tenants have pushed to lock in currently low rental rates over the leasing term. Providence saw a moderate uptick in leasing activity in recent weeks, including activity occasioned by relocation and expansion of health and educational institutions. The class A downtown office market has held up relatively well, with a current vacancy rate of 9.5 percent, while class B downtown office space has a vacancy rate of 15 percent. In Hartford, leasing activity remains \"very light\" and absorption is still slightly negative, but the retail market has fared better than expected and our contact saw a bit more enthusiasm in the local economy overall in recent weeks.\nSales transactions in greater Boston, also up on a year-over-year basis, remain limited to the highest-quality properties, for which there is brisk demand from investors seeking to add real estate back into their portfolios without taking on excess risk. Investment sales have been \"few and far between\" in Rhode Island. While contacts report that credit conditions for commercial real estate have eased on a year-over-year basis, they remain watchful of rising commercial defaults both regionally and nationally and expect significant further write-downs of commercial real estate portfolios. A Boston banker reports that his bank's balance sheet remains in excellent shape, however, and that the bank has sought aggressively to make new commercial loans in recent weeks.\nOne contact remained pessimistic concerning the outlook for the next six to 12 months, and the rest were cautiously optimistic. The caution came from concerns that recent upticks in leasing activity may prove unsustainable, especially if weak job growth (if not job losses) persists; one Boston contact thinks that rents in the city have further to fall.\nResidential Real Estate\nHome and condo sales continued to show significant year-over-year increases in December 2009, belying concerns that year-over-year declines would recur after the huge sales increases in November that were mainly attributed to the first-time homebuyer tax credit. Part of the continued strength may be due to the extension of the tax credit through April 2010 and expansion of the tax credit to include some existing homebuyers. Contacts report year-over-year home sales increases between 15 percent and 36 percent across the six New England states; condo sales increased between 29 percent and 66 percent year-over-year. January data from the Boston area show these home and condo sales trends continuing into 2010. While foreclosure sales and short sales made up 33 percent of sales in December in Rhode Island, this represents an improvement from 43 percent in December 2008.\nHome prices also showed signs of improvement in December. While the median home price declined slightly year-over-year in December in New Hampshire, it increased modestly in Connecticut, Rhode Island, and Maine, and rose more substantially in Massachusetts (11 percent) and the Boston area (20 percent, and then 6 percent in January year-over-year). The median condo price fell year-over-year in December in Rhode Island but increased in Massachusetts, Connecticut, and New Hampshire. The median condo price in the Boston area increased 27 percent year-over-year in January.\nSeveral contacts believe that sales will continue to increase year-over-year for the next few months while the expanded tax credit is still available. A Boston contact reports that traffic at open houses has been steady. Pending sales numbers for Massachusetts were strong in January.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Atlanta

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"Beige Book Report: Atlanta\nMarch 3, 2010\nReports from business contacts during January and the early part of February painted a mixed picture of economic activity for the Sixth District. While most retail contacts noted a larger than expected post-holiday decrease in traffic and sales, tourism-related spending appeared to have increased as a result of several high profile events. Residential real estate contacts indicated that both new and existing home sales softened, but generally remained above weak levels from a year ago. Commercial contractors continued to describe activity as weak. District manufacturers noted an improvement in new orders and the decline in production slowed. Banking contacts continued to note weakness in loan demand. Overall, businesses reported that labor demand remained subdued. However, temporary help agencies have noted a steady increase in job orders since the beginning of the year. Some manufacturing contacts reported an increase in input prices, but retail contacts suggested that they had very little pricing power.\nConsumer Spending and Tourism\nMost District retailers indicated that traffic and sales were lower than expected. Merchants reported that they continued to keep inventories at low levels. The outlook among retailers was mixed, with almost half of those contacted noting that they expect an increase in sales over the next few months. Despite the higher sales expectations, retailers did not indicate that they planned to make significant adjustments to inventories. District vehicle sales remained weak in January despite gains reported in some light vehicle segments.\nTourism-related spending strengthened throughout the District. Miami, in particular, experienced strong demand for hotel bookings related to the Pro Bowl and the Super Bowl. Mardi Gras, which took place in mid-February in New Orleans, is estimated to have had the highest number of attendees since 2005. Cruise industry sources noted that onboard spending increased in early 2010. The overall outlook among hospitality contacts improved since the last report.\nReal Estate and Construction\nAccording to reports from District homebuilders, new home sales softened somewhat across the region. Weakness was most pronounced among Georgia homebuilders. The majority continued to report that construction activity declined on a year-over-year basis. Most said that unsold home inventory was below year-ago levels, while reports indicated that new home inventory continued to decline on a month-to-month basis as well. The majority of builders continued to note year-over-year declines in home prices, but more than two-thirds of respondents said prices were unchanged from December. Overall, the outlook for home sales improved slightly, while expected construction activity softened a bit.\nReports from Realtors also indicated that existing home sales growth softened during January. Some noted that weather had been a deterrent to sales. Realtors indicated that high-end home sales growth remained weak but continued to improve, while low to mid-priced home sales growth softened. On a year-over-year basis, existing home inventories were mixed; however, reports indicated that unsold inventory increased from December. Most contacts continued to report year-over-year declines in home prices and more than half reported that prices had declined from December. The outlook remains positive but softened somewhat from December.\nCommercial construction across the District remained at low levels during the reporting period. Most contractors reported that activity was even with fourth quarter 2009, while a few reported continued weakness. A little more than half said that backlogs were similar to fourth-quarter levels but were below year-ago levels. Most reported that demand for new construction remained very weak. Looking ahead, the majority of contacts anticipate commercial construction activity for the remainder of the year to be largely flat.\nManufacturing and Transportation\nRecent reports from Sixth District manufacturers revealed that new orders rose, while the decline in production moderated. Over half of the manufacturers contacted expect production levels to rise in the coming months. With regard to finished inventory, contacts continued to report ongoing reductions.\nTransportation contacts reported that freight demand modestly improved in early 2010. Regional rail loadings in January and early February were above year-ago levels, with autos, chemicals, metals, and some construction-related shipments posting noticeable gains.\nBanking and Finance\nOverall, the level of bank lending continued to contract as credit conditions remained relatively tight. Banks reported having ample liquidity, but remained cautious of reducing cash reserves. Weak loan demand, particularly related to business expansion, continued to be noted by banking contacts throughout the region. Contacts also noted that stricter loan terms have effectively reduced the pool of qualified loan applications.\nEmployment and Prices\nTemporary help agencies continued to report an increase in job orders in January and early February. However, unemployment remains high across the District and job creation remained tepid. Businesses continued to describe attempts to do more with less, such as combining the duties of several jobs into one.\nDistrict manufacturing contacts indicated that input prices were up compared with a year ago, citing rising commodity prices as a primary factor. District retailers indicated that they had little pricing power and were wary of trying to pass input price increases through to consumers.\nNatural Resources and Agriculture\nCrude oil production in the District moderated slightly in January and early February, though output remained above the lows seen in August 2009. Industry contacts noted that refineries in the region continued to scale back processing of distillate fuel oil, helping to deplete historically elevated stocks. Recent wet weather and cold temperatures have negatively affected winter crops in Alabama and Georgia and limited farm work in most areas of the District. Meanwhile, Florida's farmers reported minor losses of vegetable, sugarcane, and citrus crops as a result of a winter freeze.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

New York

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"Beige Book Report: New York\nMarch 3, 2010\nThe Second District's economy has shown some further signs of strengthening since the last report, despite some apparent slowing in the housing market; input price increases have become more widespread. In general, business contacts report ongoing improvement in overall conditions and some pickup in hiring activity. Many manufacturing contacts also indicate plans to increase employment and capital spending in the months ahead. General merchandise retailers mostly report that sales were ahead of plan in January, and up from a year earlier, though some report that snowstorms slowed business in February. Auto dealers report mixed but generally sluggish sales results for January and early February, though used car sales remain strong. Tourism activity in New York City has picked up since the last report, though snowstorms in much of the East appear to have crimped activity in early February. Commercial real estate markets have been steady to softer since the last report, while the sales/investment market remains exceptionally weak. Residential real estate markets were mixed to weaker in early 2010. Finally, bankers report weakening in loan demand in all categories, rising delinquency rates--mainly in the household sector--but some leveling off in credit standards on consumer loans and residential mortgages.\nConsumer Spending\nRetailers report that same-store sales were ahead of plan in January and up 5 to 10 percent from a year earlier, though conditions were more mixed but roughly on plan in the first half of February. General merchandise chains attribute much of the slowing in February to inclement weather; one contact notes that on days and in places with no major weather issues, sales were stronger than expected. One major mall in western New York State reports some softening in business in February, but another reports that business remained strong through mid-month, helped by particularly strong business from Canadian shoppers--particularly on Presidents' Day (Family Day, in Ontario) weekend. Virtually all retailers note that inventories were lean following the holiday season, though some report fairly heavy discounting.\nNew auto sales have reportedly been steady to softer in early 2010. Auto dealers in the Buffalo area report that sales were exceptionally weak in December and remained sluggish in January, running 20 to 25 percent below a year earlier, though some pickup was reported in February. In contrast, contacts in the Rochester area report that sales ended 2009 on a very strong note, buoyed by incentives, but softened in early 2010, slipping about 10 percent below year-earlier levels. However, used car sales have reportedly been brisk across the board. Auto dealers note modest improvement in credit conditions.\nTourism activity in New York City showed signs of picking up since the last report. Manhattan hotels report that last December was the best on record in terms of the occupancy rate, which rose to 86 percent--up from 82 percent a year earlier. Business remained strong in January and early February, with occupancy rates remaining ahead of comparable 2009 levels by similar margins. This rise occurred despite a roughly 6 percent increase in the number of hotel rooms, indicating a fairly substantial increase in the number of visitors. Room rates have been fairly steady in recent months, after accounting for seasonal variation, but are still down roughly 10 percent from a year earlier. After a relatively sluggish holiday season in 2009, Broadway theaters report a noticeable pickup in business in January--total revenues were up nearly 20 percent from a year earlier, while attendance rose roughly 8 percent. Business tapered off markedly in the first half of February, but this likely reflects heavy snow in many parts of the East. Finally, surveys by both the Conference Board and Siena College indicate that consumer confidence in the region climbed to a roughly two-year high in January.\nConstruction and Real Estate\nHousing markets appear to have softened in early 2010, after hints of a pickup in late 2009. New York City's sales and rental markets both showed signs of slackening since the last report. Rental activity, which had stabilized in December, has reportedly weakened more recently, while asking rents were relatively stable but lower than a year earlier. Co-op and condo transactions, which had picked up in the latter part of 2009, are said to have slipped across the board thus far in 2010, while prices have reportedly continued to drift down. Similarly, northern New Jersey's single-family housing market has reportedly lost momentum in early 2010--particularly for new homes--after showing scattered signs of a pickup in late 2009. However, this may partly reflect unusually harsh winter weather this year in much of the state. Construction of both single- and multi-family homes is moribund, as developers are reportedly holding off on any new development. Still, a real estate agent in a relatively upscale area notes that short sales are not all that common and that most transactions are still above the remaining mortgage balance; however, she notes that prices continue to drift down--especially at the high end, where affordability remains a major factor. The homebuyer tax credit is not much of a factor because it represents a small portion of the typical house price. Buffalo-area Realtors indicate that sales were sluggish in both late 2009 and early 2010, though here, the recent extension of the homebuyer tax credit is expected to spur increased activity in the months ahead.\nCommercial real estate markets across most of the District softened since the last report. Vacancy rates in Manhattan continued to climb, while asking rents continued to fall and were down more than 20 percent from a year ago. Vacancy rates also rose noticeably in Westchester and Fairfield counties, while asking rents were down by 6 percent. In most other areas around the District, however, vacancies and rents were relatively stable. Commercial real estate sales remained exceptionally weak across the board.\nOther Business Activity\nA major NYC employment agency, specializing in office jobs, reports that hiring activity has been sluggish but stable in early 2010, in contrast with the modest pickup that seemed to be taking hold in late 2009; still, conditions are reported to be not as bad as during most of 2009. There has been some pickup in hiring in the legal industry, which had been exceptionally weak. However, there is only scattered hiring in the financial sector, and mostly at smaller firms. Separately, a securities industry contact indicates that the pace of layoffs has slowed to more normal levels, giving greater job security to those still employed; nevertheless, firms are reluctant to hire in many areas due to uncertainty about both the economic and regulatory outlook. Although there has been little activity in mergers and acquisitions or IPOs (initial public offerings), other business lines are described as fairly good. Bonuses at large firms are up from last year's depressed levels but largely restricted (i.e. options or stocks that cannot be sold immediately). There has been some shift in compensation away from bonuses and toward salaries.\nLooking at business conditions more generally, both manufacturing and non-manufacturing contacts report continued improvement since the last report. Manufacturing firms in the District note some further improvement in business conditions, along with modest increases in employment. Contacts remain optimistic about the general business outlook and anticipate widespread increases in new orders, as well as increased hiring and capital spending. Non-manufacturing contacts overall report continued modest improvement in business and a slight pickup in employment for the first time since the start of the recession; contacts remain mostly optimistic about the general business outlook and a growing proportion plan to expand capital spending and employment in the months ahead. Both manufacturers and other firms report increasingly widespread rises prices paid but little or no change in selling prices.\nFinancial Developments\nBankers report decreased demand for all types of loans, particularly in the residential mortgage category, where more than half of those surveyed report weakening demand, compared with just 11 percent reporting a pickup. Bankers also reported decreased demand for refinancing. Respondents indicate further tightening in credit standards in the commercial mortgage and commercial and industrial loan categories but some leveling off in standards on consumer loans and residential mortgages. Still, no banker reported an easing of credit standards in any of the categories.\nThe spreads of loan rates over costs of funds increased for all loan categories--most notably in the commercial mortgage category. Respondents indicate widespread decreases in average deposit rates. Finally, respondents report continuing increases in delinquency rates for all categories except the commercial and industrial loan category, where rates are reported to have leveled off.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Philadelphia

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"Beige Book Report: Philadelphia\nMarch 3, 2010\nEconomic conditions improved in some sectors in the Third District and have been about steady in others since the last Beige Book. Manufacturers, on balance, reported increases in shipments and new orders. Retailers indicated that a rising sales trend was interrupted by snowstorms in February. Motor vehicle dealers indicated that sales have been increasing slightly but were also hampered by snowstorms. Third District banks reported steady loan volume outstanding. Residential real estate agents and home builders said demand for homes has been on the rise, but February snowstorms adversely impacted construction and sales. Nonresidential real estate leasing, purchase, and construction activity continued to be weak. Service-sector firms generally reported steady activity. Business firms in the region indicated that prices of most goods and services have been steady, although there were reports of price increases for metals and some industrial products.\nThe outlook among Third District business contacts is that business conditions will improve slowly in most sectors in the months ahead. Manufacturers forecast a rise in shipments and orders during the next six months, on balance. Retailers expect sales to expand slowly as overall economic conditions improve. Auto dealers expect sales this year to be slightly above the level achieved last year. Bankers expect only slight increases in lending. Residential real estate contacts expect home sales to be boosted in the short term by the homebuyer credit, but they expect just a slow increase in sales after the expiration of the tax benefit. Contacts in nonresidential real estate expect leasing to advance as landlords reduce rents, but they expect construction to remain soft through most of the year. Service-sector firms generally anticipate slow growth in the near term.\nManufacturing\nThird District manufacturers reported increases in shipments and new orders, on balance, from January to February, with the number of firms posting gains exceeding the number recording declines by a fair margin. The improvement was also widespread, as most of the major manufacturing industries in the region posted increases. Comments from manufacturers indicated that their customers are beginning to step up orders after a period of slow activity. One contact said that \"for the first time in 16 months there is slight optimism among our customer base,\" and another said that \"we are ramping up to handle a few large projects.\" However, the overall expansion in manufacturing activity since the last Beige Book was constrained somewhat by production interruptions resulting from snowstorms during February.\nThird District manufacturers expect business conditions to improve during the next six months, on balance. Among the firms polled in February, about half expect increases in new orders and shipments through the middle of the year; about one-tenth expect decreases. Capital spending plans among area manufacturers have improved since the last Beige Book. About one-third of the firms polled in February plan to increase expenditures for new plant and equipment, although one-half plan to maintain level spending. Despite the general improvement in current and expected conditions in the region's manufacturing sector, some firms said further gains could be limited by continuing tightness in credit markets and adverse developments in regard to taxes and regulations.\nRetail\nThird District retailers reported that February snowstorms hampered shopping, offsetting a marginally rising sales trend. As a result, many of the stores contacted for this report said they will likely post month-to-month and year-to-year decreases in sales for February. Retail contacts generally indicated that, except for the snowstorms, sales have been moving up slowly. Most cautioned, however, that a strong growth trend is not imminent. One store executive said sales were \"just turning the corner\" toward improvement. Looking ahead, Third District retailers generally expect only slow growth in sales for some time. One retailer said, \"Sales will be on a plateau until employment picks up.\"\nThird District auto dealers reported a slight improvement in sales since the last Beige Book, but a negative impact from February snowstorms. Looking ahead, dealers continue to expect total sales for this year to be slightly ahead of last year.\nFinance\nTotal outstanding loan volume at Third District banks has been virtually level since the last Beige Book, according to bankers contacted for this report. On balance, commercial bank lending officers said slight increases in business loans and real estate loans were being offset by decreases in consumer loans. Several banks indicated that loan delinquencies have been about steady in recent weeks, although credit quality remained a concern. One banker said, \"Credit quality is holding its own, but we are concerned that some borrowers will not be able to stay current beyond the first quarter.\"\nThird District bankers see some signs of loan growth ahead. Some reported increased inquiries about business loans. However, in general, bankers in the region expect consumer loan demand to remain soft, and they expect tight credit standards to limit expansion in lending of all types.\nReal Estate and Construction\nSales of new and existing homes have picked up somewhat since the last Beige Book. Local real estate agents and home builders said the homebuyer tax credit was providing some impetus to sales, especially in the lower- and moderate-price segments of the market. Some builders have started speculative construction of houses to attract buyers who wish to take advantage of the tax credit before its expiration. However, snowstorms in February interrupted construction as well as sales, according to builders and real estate agents. Real estate agents said the inventory of homes listed for sale remained high, and sales prices have been steady to down across the region. Residential real estate contacts expect sales to rise seasonally in the spring, but several cautioned that sales might decline when the tax credit expires. Looking beyond that date, one agent said, \"We are predicting a slow recovery in sales.\"\nNonresidential real estate firms indicated that leasing, purchase, and construction activity remained slow, but there have been some slight increases in the sales of commercial buildings in some parts of the region. Contacts reported that vacancy rates have been about steady since the last Beige Book report, but effective rents have continued to decline. Much of the recent leasing activity has been for relatively small blocks of office space, according to agents, who say that tenants are reluctant to commit for large blocks of office space. Contacts reported a slight increase in leasing of industrial space, but they said the demand for retail space has remained weak. Contacts expect nonresidential real estate markets to remain soft through at least mid-2010, by which time improvement is expected in some, but not all markets. A contact in office markets said that \"significantly reduced rental rates will be influential\" in stimulating leasing activity in office markets, but a contact in industrial markets said that sector will be \"tested\" in 2010.\nServices\nService-sector firms generally reported that activity has been about steady since the last Beige Book. Some indicated a slight strengthening in demand for their services, which some described as only \"stabilization\" or \"an uptick.\" Some engineering firms noted that they have had increases in demand for work related to energy conservation and efficiency, but other construction-related activity continued to be very weak. The region's service-sector firms expect slow growth, at best, in the near term. One noted that \"clients are starting to talk about projects they have had on the shelf, but they're not doing anything yet,\" and another said, \"We continue to be cautious.\"\nPrices\nReports on input costs and output prices have been mixed since the last Beige Book. A number of manufacturing firms noted increases in costs of the commodities they use. Most continued to report that they have not raised the prices of the products they make, although producers of metals and some types of industrial machinery have raised prices. Retailers reported mostly flat selling prices.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Chicago

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"Beige Book Report: Chicago\nMarch 3, 2010\nEconomic activity in the Seventh District improved at a moderate pace in January and February. Consumer and business spending increased slightly. Manufacturing continued to improve, while construction remained weak. Credit conditions were little changed. Price pressures for most raw materials leveled off, and wage pressures were minimal. Hog and cattle prices rose, while feed costs fell along with corn and soybean prices.\nConsumer Spending\nConsumer spending increased slightly in January and February. Retail sales continued to improve, although contacts indicated that the rate of increase had slowed in recent weeks. Sales of consumer durables and luxury items remained weaker than nondurables and necessities, but a small pick-up in demand for appliances was reported. Rising sales led retailers to begin to rebuild inventories from their very low levels. Contacts expected that this would likely continue through the first half of the year. Auto sales were down from the previous reporting period. Fewer incentives, inclement weather, and the Toyota recall contributed to the decline. Contacts indicated that many Toyota customers had likely held off on purchases given concern over the recall's negative impact on the residual value of their Toyota vehicles. Auto dealers reported that inventories, while still lower than normal, were at comfortable levels.\nBusiness Spending\nBusiness spending also increased slightly from the previous reporting period. Contacts indicated that inventories were currently being restocked only as needed to keep up with demand. Several manufacturing contacts questioned the sustainability of any further inventory accumulation, pointing to uncertainty surrounding the economic outlook, volatility of materials prices, and tighter credit as forces keeping inventories lean. Most contacts, however, thought that these factors would at worst only serve to delay the rebuild in manufacturing until the second half of the year. Labor market conditions improved somewhat in January and February with layoffs declining and the workweek increasing. In addition, the demand for temporary workers remained strong with a large staffing firm reporting that billable hours increased substantially, particularly from the manufacturing sector. Permanent hiring continued to be slow, but contacts indicated some improvement in demand in information technology, healthcare, sales, and financial services.\nConstruction and Real Estate\nConstruction activity remained weak in January and February. Residential development was at a standstill, with very few substantial new projects expected to come on-line in the near future. In contrast, interest in investing in existing apartment buildings was indicated to be very strong. Contacts did, however, expect that residential construction would increase some through the spring as developers meet demand stemming from the homebuyer tax credit that expires in April. To do so, most builders are working solely off existing lots given the large inventory of distressed land still available for sale. Demand remained weak for nonresidential construction. The overhang of vacant buildings continued to hold back commercial and industrial construction. Infrastructure construction was the lone bright spot with the federal stimulus bill funding providing some boost.\nManufacturing\nManufacturing activity gradually improved in January and February. Orders increased, primarily reflecting the restocking of inventories. In contrast, contacts noted that order backlogs were declining and customers were hesitant to place new bookings much beyond the first quarter. The auto industry remained a strong source of growth in manufacturing, as did pharmaceuticals. Steady improvement was also noted in steel and heavy machinery, particularly sales of mining and agriculture equipment. Demand from Asia continued to propel export activity; but with growth in the Chinese economy expected to slow, contacts thought export activity would recede some in the near future. Manufacturers with ties to residential or commercial construction were much less positive, and did not expect to see much of a recovery in 2010. However, a contact noted that dealer inventories of heavy equipment had returned to a more normal level and indicated that distributors were being told to prepare for an increase in shipments by a large manufacturer of heavy equipment. This was seen as providing justification for an expected pick-up in manufacturing activity in the second half of the year.\nBanking and Finance\nReports on credit conditions were little changed from the previous reporting period. Banking contacts reported that business loan demand remained low with utilization of credit lines continuing to decline. Consumer credit conditions, on the other hand, continued to slowly improve with auto lending leading the way. Contacts noted that many of their business and consumer clients were still waiting for the uncertainty surrounding the economic outlook to pass before taking on new debt. Several indicated, however, that with the significant declines in loan volume in recent months, competition for high-credit-quality, high-return customers was beginning to pick up slowly. This was especially true for larger banks where declines in asset quality showed further signs of leveling off in January and February. However, the strained balance sheets of many midsize banks continued to limit the availability of credit. Contacts generally expected that credit availability would increase only slowly in 2010, in line with their expectations for a gradual recovery in economic activity.\nPrices and Costs\nPrice pressures for most raw materials flattened out from the previous reporting period. In contrast, upward pressure on prices for industrial metals like steel and copper was expected to continue, as demand outstripped capacity currently on-line. The colder than expected winter led to higher natural gas prices, increasing energy costs. However, contacts indicated that natural gas in storage remained very high and that the current pressure on prices was likely to be temporary. Pass-through of cost pressures to downstream prices was small on balance, as contacts indicated pricing power remained limited in many industries. Wage pressures were reported to be minimal.\nAgriculture\nNews that last fall's corn harvest was a record triggered declines in the price of corn, even though a higher than typical percentage of corn acres remained unharvested. There continued to be problems with the quality of corn in storage, leading to price discounts at delivery. Higher than normal drying costs compressed corn margins, too. In contrast, high quality grain was selling at a premium reflecting in part export demand. With much field preparation work left undone last fall and above normal snows this winter, weather this spring will play a larger role than typical in planting decisions. Hog and cattle prices moved up during the reporting period, although dairy prices flattened out. Feed costs declined with corn and soybean prices, and financial pressures on livestock producers lessened from those experienced during a challenging 2009. Still, contacts reported that refinancing agricultural loans was more difficult than in recent years.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Cleveland

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"Beige Book Report: Cleveland\nMarch 3, 2010\nThe economy in the Fourth District continues to show some signs of improvement, although overall activity remains significantly below pre-recession levels. Reports from manufacturers indicated that production was stable or rose moderately and that orders have increased. New home sales improved slightly, while non-residential builders characterized activity in their industry as slow. Financing remains a major issue for residential and commercial contractors. January sales figures from District retailers and auto dealers were mixed. Energy production held steady, and reports showed a small upturn in freight transport volume. Demand by businesses and consumers for new loans remains weak, while the growth rate in core deposits is tapering off.\nLabor markets are beginning to show a slight recovery, with some business owners recalling a few workers or increasing production hours. Staffing-firm representatives reported an increased number of job openings, especially in healthcare and, to a lesser degree, in manufacturing. Wage pressures are contained. We heard many reports of rising steel costs, otherwise, raw material and product pricing was generally stable. Capital spending is beginning to rise, but continues below pre-recession levels. Inventories remain under tight control.\nManufacturing\nReports from District factories showed that production was largely stable or rose moderately during the past six weeks, with a majority of our contacts citing an increase in new orders. Most manufacturers told us that production levels have increased on a year-over-year basis, though by varying amounts. In general, our contacts are cautiously optimistic in their outlook. However, several believe that the recent rise in new orders is a result of customers restocking their inventories and may not signal a sustainable increase in production. Steel shipments were in line with expectations, with volume reports showing a gradual improvement. Although no end market is particularly strong, rising volume was attributed primarily to defense and energy. Our steel contacts are hopeful that improving conditions will continue. District auto production showed a small increase during January on a month-over-month basis and a substantial rise when comparing year-over-year data for domestic and foreign nameplates.\nManufacturers reported that inventories are in line with demand, while capacity utilization is beginning to improve. In general, capital investments continue on the low side. Nonetheless, a number of contacts said that they have increased their capital budgets for 2010; others commented that if new orders continue to rise, they are likely to spend more on capital projects later in the year. We heard many reports of increasing steel prices, which were attributed primarily to rising raw material costs. However, there was little response on the part of manufacturers to raise their own prices. Reports indicated that food-related commodity prices have dropped. Half of our respondents said that they have increased the number of work hours or recalled a few production employees, and wage pressures are contained.\nReal Estate\nIn general, new home sales improved slightly during the past six weeks and on a year-over-year basis. Purchases of entry-level homes continue to do well, and several builders reported that the move-up category is gaining momentum. However, builders expressed concern about the potential effect on home sales once the first-time home buyers' tax credit expires on April 30. They also reported that banks remain unwilling to lend money for constructing spec houses, and tight credit standards are keeping many potential buyers out of the market. Our contacts had decidedly mixed reports on the list prices of new homes and discounting. Construction material costs were generally stable, although the price of lumber has started to climb from its recent low. General contractors continue to operate with skeleton crews, but some reported that they are in the process of recalling a few workers. Subcontractors are struggling to keep busy.\nReports characterized activity in non-residential construction, including public works, as slow. Although most of our contacts said that business has fallen on a year-over-year basis and many have nearly depleted their backlogs, inquiries are picking-up slightly. Most projects under way fall within the public works and education categories. Nonetheless, two builders reported a small upturn in industrial construction. About half of our contacts expect activity to remain weak in 2010, while others see a slight improvement when compared to 2009. We continue to hear numerous accounts of difficulties in obtaining project financing. One executive noted that his firm is now financing some of its clients' projects. Increased costs for construction materials were limited to steel, and subcontractor pricing remains very competitive. Employment by general contractors has been largely stable.\nConsumer Spending\nReports comparing January retail sales to the previous 30-day period were mixed. However, a majority of our retail contacts said that sales improved slightly on a year-over-year basis. Although consumers continue to focus on buying necessities over discretionary items, several retailers noted that they see a slight pick up across a broad range of products, including housewares and furniture. Almost all of our contacts expect sales to improve somewhat during the next few months. Vendor and store pricing has been relatively stable. Retail inventories continued on the lean side. Auto dealers reported that new-vehicle sales tended toward the down side in January when compared to December. On a year-over-year basis, most new-auto sales figures showed an uptick. Used-vehicle purchases are seen as holding steady. Dealers expect overall sales to show modest improvements at best during the next few months. Auto store inventories were characterized as tight. Some contacts told us that credit and financing have improved a bit during the past few weeks, and that many consumers remain heavily dependent on manufacturers' incentives. Reports show little change in staffing levels at retailers or auto dealers.\nBanking\nDemand for new business loans remains weak. Bankers experiencing increased volume attributed it mainly to draw-downs on existing lines and roll overs from other banks, rather than new activity. Interest rates and spreads were steady. On the consumer side, conventional loan demand dropped substantially since our last report, with several bankers characterizing demand as very soft. Activity in the residential mortgage market was stable to down and dominated by refinancings. On balance, core deposits continued to grow, but many bankers said that the rate of growth has tapered off. Credit standards remain tight, with many bankers emphasizing that they are actively managing or reviewing their existing loan portfolios and relationships. The credit quality of loan applicants was stable to weaker for consumers and businesses. Reports on delinquencies were mixed, with most increases occurring in real estate portfolios. Outside of some strategic hires and controlled attrition, banks have not appreciably changed their employment levels.\nEnergy\nLittle change in oil and gas output was reported during the past six weeks, with drilling activity in 2010 expected to be about equal to 2009. However, natural gas drilling may get a boost from recent investments made in Marcellus shale reserves. Spot prices for oil and gas are stable within a narrow range. Coal production continues to be below 2008 levels due to lower power generation and depressed steel production. Prices for coal were mixed. Capital expenditures by oil and gas producers are tightening, whereas investments by coal producers have been delayed until market conditions improve. Production equipment and material costs remain stable. Employment was steady, and little hiring is expected in the near future. Wage pressures are contained.\nTransportation\nFreight transport executives reported a slight improvement in shipping volume since our last report. One contact noted that January shipments increased on a year-over-year basis. Margins remain depressed, with several executives commenting that over capacity continues to be the key issue facing the industry. Nonetheless, most contacts we spoke with are cautiously optimistic in their outlook and expect modest improvements in volume during 2010. Apart from fluctuating fuel costs, prices have been relatively stable. Capital spending is expected to increase somewhat on a year-over-year basis, but remain significantly below pre-recession levels. A few contacts noted that they plan to allocate monies for IT equipment. However, spending on new trucks will be limited until capacity utilization improves. Hiring was limited to replacement only. Wage reports were more upbeat: One contact said that he is partially restoring wage cuts made a year ago, while another said he is lifting his firm's salary freeze.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

St Louis

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"Beige Book Report: St Louis\nMarch 3, 2010\nEconomic conditions in the Eighth District were mixed but showed further signs of improvement in some areas. Manufacturing activity, in particular, increased since our previous report. Services activity, in contrast, declined since our previous report. Retail sales were down in January and February over a year ago, while auto sales were about even over the same period. Residential real estate market conditions were mixed while commercial and industrial residential markets remained slow. Overall lending at a sample of large District banks decreased moderately during the fourth quarter of 2009.\nConsumer Spending\nContacts reported that retail sales in January and early February were down, on average, over year-earlier levels. About 52 percent of the retailers saw decreases in sales, while 32 percent saw increases and 16 percent saw no changes. About 53 percent of the respondents noted that sales levels met their expectations, 42 percent reported that sales were below expectations, and 5 percent reported that sales were above expectations. Lower-priced items and men's apparel were strong sellers, while higher-priced items moved more slowly. About 64 percent of the contacts noted that inventories were at desired levels, while 20 percent reported too-high inventories and 16 percent reported too-low inventories. The sales outlook among the retailers was mostly positive for March and April. About 54 percent of the retailers expect sales to increase over 2009 levels, while 25 percent expect sales to decrease and 21 percent expect sales to be similar to last year.\nCar dealers in the District reported that, compared with last year, sales in January and early February were roughly the same, on average. About 55 percent of the car dealers surveyed saw decreases in sales, while 41 percent saw increases and 4 percent saw no changes. About 32 percent reported an increase in low-end vehicle sales relative to high-end vehicle sales, while 14 percent reported the opposite. About 30 percent reported more acceptances of finance applications, but another 30 percent reported more rejections. About 27 percent of the car dealers surveyed reported that their inventories were too low, while 18 percent reported that their inventories were too high. The sales outlook among the car dealers was generally optimistic for March and April. About 68 percent of the car dealers expect sales to increase over 2009 levels, but 27 percent expect sales to decrease. The remaining 5 percent expect sales to be similar to last year.\nManufacturing and Other Business Activity\nManufacturing activity increased since our previous survey. More contacts reported plans to expand or start new operations and increase employment than contacts who reported that order volumes remain slow and that they have no plans to expand employment. Several firms in auto parts manufacturing reported an increase in new orders and are expanding operations and hiring new employees accordingly. Firms in aerospace products; furniture; cosmetics; and heating, ventilation, and air conditioning manufacturing announced expansion plans. Firms in plastic products and fabricated metal products also announced plans to open new plants in the District and expand employment. In contrast, a smaller number of firms reported that order volumes remain slow and anticipate negative effects on employment. A firm in animal slaughtering and processing announced that it will close its operations, resulting in a large number of job losses.\nEmployment in the District's service sector contracted since our previous report. Several contacts in business support services announced layoffs. Similarly, firms in transportation/warehousing and medical services announced large job cuts. A firm in the leisure/hospitality business declared bankruptcy, resulting in a large number of seasonal job losses. In contrast, two firms in medical services announced an expansion in their local regions, with new facilities and additional hires.\nReal Estate and Construction\nHome sales were mixed throughout the Eighth District. Compared with the same period in 2008, December 2009 year-to-date home sales were up 3 percent in Louisville and 1 percent in St. Louis while home sales were down 2 percent in Little Rock and 10 percent in Memphis. Residential construction continued to decline throughout most of the District. December 2009 year-to-date single-family housing permits fell in most District metro areas compared with the same period in 2008. Permits declined 4 percent in Little Rock, 13 percent in St. Louis, 15 percent in Louisville, and 32 percent in Memphis.\nCommercial and industrial real estate market conditions remained slow throughout the District. Compared with the third quarter of 2009, fourth-quarter 2009 industrial vacancy rates increased in Little Rock and Louisville but decreased in Memphis and St. Louis. During the same period, the suburban office vacancy rate increased in Louisville but decreased in St. Louis, Memphis, and Little Rock. The downtown office vacancy rate increased in Louisville and Little Rock but remained the same in St. Louis and Memphis. A contact in northeast Arkansas reported that construction is at a standstill with the exception of a large hospital project. A contact in Evansville, IN, noted that major construction projects are lagging and that improvement is not expected for six to twelve months.\nBanking and Finance\nA survey of senior loan officers at a sample of large District banks showed a moderate decrease in overall lending activity during the fourth quarter of 2008. During this period, credit standards for commercial and industrial loans remained unchanged, while demand for these loans ranged from about the same to moderately stronger. Credit standards for commercial real estate loans were tightened somewhat, while demand for these loans was about the same. Meanwhile, credit standards for consumer loans remained unchanged, while demand ranged from about the same to weaker. Credit standards for residential mortgage loans ranged from unchanged to tightened somewhat, while demand for these loans ranged from about the same to moderately weaker.\nAgriculture and Natural Resources\nTotal production of corn, soybeans, and rice increased from 2008 to 2009 in the District states, while total production of sorghum, winter wheat, cotton, and tobacco decreased. In the District states, the prices of corn, winter wheat, rice, and tobacco decreased from 2008 to 2009 while the price of cotton increased; the prices of soybeans and sorghum were down in most District states. The total value of field crops in District states fell by 7 percent from 2008 to 2009.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

National Summary

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"Beige Book: National Summary\nMarch 3, 2010\nPrepared at the Federal Reserve Bank of Kansas City and based on information collected on or before February 22, 2010. 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 conditions continued to expand since the last report, although severe snowstorms in early February held back activity in several Districts. Nine Districts reported that economic activity improved, but in most cases the increases were modest. Overall conditions were described as mixed in the Atlanta and St. Louis Districts, though St. Louis noted further signs of improvement in some areas. Richmond reported that economic activity slackened or remained soft across most sectors, due importantly to especially severe February weather in that region.\nConsumer spending improved slightly in many Districts since the last survey, but severe snowstorms in early February limited activity in some Districts. Tourist activity was reported as increased or mixed, with some improvement in hotel occupancies. The demand for services was generally positive across Districts, most notably for health-care and information technology firms. Of the five Districts reporting on transportation, three characterized activity as improved over the previous survey. Manufacturing activity strengthened in most regions, particularly in the high-tech equipment, automobile, and metal industries. Residential real estate markets improved in a number of Districts, although several Districts noted that activity softened or remained weak partly due to extreme winter weather. Most Districts characterized commercial real estate and construction activity as weak or having declined further, but some Districts noted slight stabilization and a few signs of modest improvement. Loan demand remained weak, and lending standards remained tight across the country. Harsh weather continued to negatively affect agricultural activity, although some Districts reported favorable crop conditions. Districts reporting on energy activity said it continued to strengthen, particularly drilling for natural gas.\nPrice pressures were mostly limited, with the exception of some increases in raw materials prices. Even with input costs rising, selling prices remained stable due to competitive pressures and limited pricing power. Although some Districts reported an uptick in hiring or a slowdown in layoffs, labor markets generally remained soft throughout the nation, which resulted in minimal wage pressures.\nConsumer Spending and Tourism\nConsumer spending showed signs of improvement in many Districts since the last report but was hampered in several regions by severe weather conditions in early February. Retail sales improved in the Chicago, Minneapolis, Dallas, and San Francisco Districts, and New York said sales were well above year-ago levels in January and met expectations in February despite inclement weather. Philadelphia also reported that sales were moving up slowly until snowstorms hit in February. Boston and Cleveland characterized sales as mixed but slightly higher overall than year ago levels. Sales were lower than expected in the Atlanta and Kansas City Districts and were down from year-ago levels in the St. Louis District. Several Districts reported that sales were strongest for lower-priced items, while sales of luxury and big ticket items remained sluggish. However, San Francisco noted scattered reports of increased discretionary spending, and Cleveland said some retailers noted a broader, if still slight, increase in demand across a variety of products. Inventories were being managed carefully and held at fairly low levels in most Districts, but Chicago said rising sales were leading retailers to begin rebuilding inventories from low levels.\nAuto sales were generally reported as flat or down, with a few Districts again noting that some of the sluggishness was likely due to poor weather conditions. New York, Cleveland, and San Francisco all noted some softening in new auto sales, though New York cited brisk sales of used vehicles. Chicago and Kansas City also reported declining auto sales, while Dallas noted some seasonal softness and Atlanta said sales remained weak. Some Districts reported modest improvement in auto credit conditions. Cleveland noted that many consumers remain reliant on manufacturers' incentives, and auto dealers in the Chicago District blamed part of their recent sales decline on reduced factory incentives.\nDistricts reporting on tourism said that activity was either rising or mixed since the last survey period. Ski resorts in the Richmond and Kansas City Districts reported at least modest rebounds in activity from year-ago levels, while Minneapolis characterized skier visits to a Montana resort as flat. New York said hotel occupancies in Manhattan were up considerably from a year ago in January and Broadway theatre activity was robust before falling off due to weather in February. Atlanta also reported rising tourism activity related to several successful major sporting events and a well-attended Mardi Gras in New Orleans. San Francisco noted increases in visitors to Hawaii and Las Vegas and said hotel occupancies stabilized in some other areas.\nNonfinancial Services\nNonfinancial services activity was reported as steady or improved by the majority of Districts. Boston, St. Louis, Minneapolis, and San Francisco reported generally solid demand in health-care services, although Minneapolis noted continued weakness in elective procedures. New York indicated that a growing number of service firms planned to increase capital spending in the months ahead, but investment expectations diminished among high-tech companies in the Kansas City District. Richmond reported that service revenues fell due to the record snowstorms, but a few contacts saw a slight pickup in demand, particularly architectural firms, hospitals, and financial service professionals.\nIn transportation services, Cleveland, Atlanta, and Kansas City reported an improvement in activity since the last survey, while Dallas said activity was mixed and St. Louis noted large job cuts in the industry. Regional rail loadings were above year-ago levels in the Atlanta District, especially for autos, chemicals, metals, and some construction-related equipment. Intermodal firms in the Dallas District reported no change in cargo volumes, with a rise in exports being offset by a decline in imports. Although shipping volumes increased, Cleveland noted that margins remained depressed due to over-capacity issues, limiting investment in new trucks.\nManufacturing\nManufacturing activity increased further in most Districts, although Minneapolis, Dallas, and San Francisco characterized overall activity as flat or mixed. Philadelphia reported widespread production increases across most industries, and manufacturers in the Cleveland District reported a general rise in capacity utilization. Many Districts reported strong production in metals, and the Boston, Dallas, and San Francisco Districts noted strength in high-tech equipment, particularly semiconductors. Cleveland, Chicago, St. Louis, and Dallas noted solid improvements in auto-related manufacturing. A consumer goods company in the Boston District said European sales were at healthier levels. Contacts in the Chicago District reported strong growth in Asian exports but remained concerned about China's underlying economic strength. Dallas reported that exports for natural-gas based products remained strong, but weak demand for refined products has trimmed margins and cut capacity utilization further. Construction-related activity remained weak in the Chicago and Dallas Districts, and new orders for commercial aircraft and parts were sluggish in the San Francisco District. Philadelphia and Richmond noted productions delays due to the winter snowstorms in February, but some factories were able to make up the losses with longer work hours and extended shifts. Several manufacturers in the Philadelphia District said production gains could be limited due to continued tightening in credit markets and adverse developments in taxes and regulations. Plant managers in a few Districts reported that a large number of customers were simply restocking inventories, leading to concerns about the sustainability of the increase. However, contacts in most Districts remained optimistic for future months, with several reports of planned increases in capital spending.\nReal Estate and Construction\nResidential real estate markets improved in a number of Districts, remained weak or softened further in the New York, Atlanta, and Chicago Districts, was little changed in the San Francisco District, and characterized as mixed in the St. Louis District. Richmond also reported overall housing activity as mixed, but one contact noted that absent the harsh weather, market conditions might have improved. Adverse weather conditions also hampered home sales and construction in the New York, Philadelphia, and Atlanta Districts. Most Districts attributed stronger home sales to the home-buyer tax credit, with several contacts apprehensive about future sales once the credit expires on April 30. Philadelphia, Cleveland, Kansas City, and Dallas reported that sales were strongest for low-priced and starter homes, while Dallas cited financing difficulties for high-end homes. Home construction was down or stagnant in most Districts, with the exception of the Minneapolis, Kansas City, and Dallas Districts. Atlanta said the most pronounced weakness was among Georgia homebuilders, and San Francisco attributed weak construction activity to elevated home inventory levels. Home prices mostly remained flat or declined slightly, but signs of improvement were noted in the Boston and San Francisco Districts. A real estate agent in a relatively upscale area of the New York District said prices have continued to drift downward but that short sales were relatively rare and most transactions were still above the mortgage balance.\nCommercial real estate conditions remained weak or declined further in most Districts, although some Districts noted slight stabilization or modest signs of improvement. Commercial real estate activity weakened in the Richmond, Minneapolis, Kansas City, Dallas, and San Francisco Districts, though Dallas noted that leasing fell at a slower rate and San Francisco cited increased leasing in some segments. Boston and Philadelphia said conditions remain weak, but both noted some improvement in sales of commercial space. New York reported softer activity in the New York City area but some steadying in vacancies and rents elsewhere, while St. Louis said activity remained weak throughout the District. Several Districts also noted that many tenants were pushing for, and in some cases receiving, concessions on rents. All Districts reporting on commercial construction said that activity remained weak or slow, except for some moderate boost from federal stimulus projects and other public construction. Credit for commercial development and transactions was still very difficult to obtain in several Districts, though San Francisco noted a slight improvement in financing availability.\nBanking and Finance\nLoan demand remained weak across the country. New York, Cleveland, and Kansas City reported decreased demand for most types of loans. Other Districts said loan demand was unchanged but soft. Richmond and Chicago noted that the weak economic outlook was holding back loan demand, and San Francisco said caution about hiring and spending plans was keeping businesses from seeking credit. However, Philadelphia and Richmond reported banks were receiving more inquiries from businesses about loans, and Dallas said contacts were hopeful that loan demand would pick up by the end of the year.\nMost Districts indicated that banks remained cautious about lending. New York, St. Louis, and Kansas City reported somewhat tighter credit standards on commercial real estate loans, and New York noted tighter standards for commercial and industrial loans. In other Districts, credit standards were little changed but remained tight. Atlanta reported that banks had ample liquidity but were reluctant to reduce cash reserves. Chicago said a leveling in asset quality was causing large banks to become more interested in lending to prime borrowers, but strained balance sheets were holding back lending by mid-size banks. In the Dallas District, smaller banks reported that regulatory requirements were limiting their ability to expand real estate lending. Loan quality remained a concern but showed signs of stabilizing in some Districts. New York, Dallas, and San Francisco cited further declines in loan quality. In addition, banks in the Philadelphia and Kansas City Districts were reported to be slightly less pessimistic about future loan quality than in the previous survey.\nAgriculture and Natural Resources\nHarsh winter weather continued to dampen overall agricultural activity, although crop conditions were still generally favorable in most Districts. Minneapolis, Kansas City, and Dallas reported that livestock were stressed by severe weather and that producers provided supplemental feed due to poor grazing conditions. Atlanta commented that cold temperatures caused minor freeze damage to vegetable and citrus crops. Despite below-average temperatures, Kansas City reported the winter wheat crop was in generally good condition. Dallas and San Francisco said that heavy rains and snowfall improved soil moisture for this year's crop production, though some contacts were concerned that spring planting could be delayed if fields remain too wet. Crop prices edged down following the bumper fall harvest, but Chicago noted that high-quality grain was selling at a premium, due in part to strong export demand. Hog and cattle prices strengthened and dairy prices were flat. Kansas City noted stronger farm incomes from crop production, while agricultural lenders in the Minneapolis District expected farm income and spending to decrease.\nEnergy activity generally strengthened since the last survey period. Kansas City and Dallas reported increased drilling activity, especially for natural gas, and Cleveland noted increased natural gas-related investment. However, producers in the Kansas City District were concerned that a boost in supply from shale gas production could lower natural gas prices later in the year. Minneapolis reported that oil exploration expanded in February, while oil production was stable in the Atlanta and San Francisco Districts. Coal production in the Cleveland and Kansas City Districts remained below year-ago levels. Minneapolis reported brisk activity in metal mining and continued energy construction.\nEmployment, Wages, and Prices\nThe pace of layoffs slowed in most Districts, but hiring plans still remained generally soft. New York cited a slowdown in layoffs at a securities firm and noted a pickup in hiring in what was still characterized as an exceptionally weak legal industry. Staffing firms in the Boston District also saw a strengthening in demand, particularly from the financial and manufacturing sectors. Several manufacturing and construction firms in the Cleveland District began recalling workers, and temporary staffing accelerated in the Richmond, Atlanta, and Chicago Districts. However, Chicago said demand for permanent workers was low, and a manufacturing contact in the Richmond District held back employment due to productivity improvements. Layoffs were also reported at several retail and manufacturing firms in the Dallas District, and Minneapolis said companies in the medical insurance and financial services industries reduced employment. Wage pressures were minimal, but Boston and Cleveland noted a lift in salary freezes and Richmond said wages rose at service and retail businesses.\nThe majority of Districts reported limited price pressures, although several noted rising input costs due to higher commodities prices. Boston, Cleveland, Chicago, and Dallas noted an increase in metals prices, particularly steel, and Chicago and Kansas City said the upward pressure on some raw materials prices was likely to continue. Lumber prices rose in the Cleveland and Richmond Districts due in large part to weather-related supply issues. On the other hand, San Francisco reported commodity prices were stable or down, with declines in natural gas, copper, and aluminum prices. Some contacts in the Boston District said customers sought fewer price concessions from vendors in order to better ensure reliable deliveries. But nearly all Districts reported limited pricing power, with many firms unable to increase selling prices due to competitive pressure. Retail prices were stable in most Districts, although San Francisco noted heavy discounting. Districts generally expected stable prices overall heading forward.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Dallas

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"Beige Book Report: Dallas\nMarch 3, 2010\nEconomic activity improved further in the Eleventh District over the past six weeks. Firms across a wide range of industries continued to report slight increases in demand. However, conditions in a few sectors, notably commercial real estate, financial services and construction-related manufacturing remained weak. Outlooks were generally more upbeat than last time.\nPrices\nPrice pressures remained minimal across industries. Most contacts said prices were holding steady, although a few firms noted they were making concessions in order to get business. Raw material prices were mostly stable, but there were reports of an uptick in the cost of fiber and some industrial metals. Most firms that saw an uptick in raw material costs said they were unable to pass on these increases to customers.\nEnergy prices declined slightly from early January to mid-February. Crude oil prices trended downward from $82 to $79 per barrel. On-highway diesel prices followed suit, falling nearly 10 cents over the same period. Natural gas prices slipped from $6 per thousand cubic feet to near $5, even as colder-than-normal weather trimmed bloated inventories back to near-normal levels. Contacts say that the approaching end of winter is keeping natural gas prices relatively steady. In contrast, prices of chemicals and related products rose during the reporting period.\nLabor Market\nMost respondents noted steady employment levels. Still, there were scattered reports of layoffs at selected retail, high-tech, emergency vehicle and construction-related manufacturing firms. On a positive note, staffing firms continued to report increased hiring activity. In addition, there were reports of an uptick in staff levels at some energy service, food, high-tech and transportation manufacturing firms.\nWage pressures were nonexistent. A few firms reported they either had already given, or planned on giving small pay increases to employees this year. In contrast, real estate contacts noted that people were taking jobs at reduced salaries.\nManufacturing\nConstruction-related manufacturers report that demand continues to bounce along the bottom. There is excess capacity in the industry and margins remain depressed. The outlook is still bleak, especially for manufacturers tied to commercial construction. Fabricated metals producers noted a slight uptick in orders, however, demand remains below year-ago levels.\nReports from transportation manufacturers were mixed. Producers of trailers reported steady demand over the past month, but said that orders were up both from three months and year-ago levels. Emergency vehicle manufacturers noted a cut back in production, and added that the outlook had weakened. An automobile manufacturer reported that sales in Texas are holding up better than in other parts of the country and the outlook is\"bright\", with steady growth expected throughout the year.\nReports from the paper industry were mixed. A large corrugated box manufacturer reported a moderate pickup in demand while other contacts, especially those tied to the construction sector, noted continued weakness. Respondents expect 2010 to be stronger than last year. Food manufacturers cited an increase in demand over the past month, and reported a positive sales outlook for the year.\nHigh-tech manufacturers report continued strong growth in orders and production. Demand for semiconductors remains solid, and respondents say they are struggling to keep up with demand. Inventories are at very lean levels, and most contacts expect demand to remain robust over the next three to six months.\nPetrochemical demand was mixed. Demand for products tied to domestic manufacturing rose further, while producers that sell to residential and commercial construction said domestic sales remained weak. Export demand is still strong due to the cost advantage of U.S. natural-gas based products over foreign oil-based ones, but producers say that this cost advantage has narrowed in recent weeks.\nDepressed demand for refined products has further weakened margins, and contacts say refiners are responding with further cuts in utilization rates. Currently rates are below 80 percent, which excluding weather-related shut-ins, are among the lowest utilization rates over the past twenty-five years.\nRetail\nRetail demand held up relatively well during the reporting period. Contacts say year-over-year sales have improved, however, comparisons are favorable because of the weakness in year-ago numbers. Department store results were slightly better than expected. Consumers remain price conscious. Outlooks are still cautious, and contacts expect only a modest improvement in business this year.\nAutomobile dealers report seasonal softness in sales over the past six weeks. Inventories remain lean, and contacts expect gradual improvement in sales throughout the year.\nServices\nStaffing firms report continued improvement in demand. Orders are streaming in at a solid pace and billable hours are up. Demand is still largely for contract work, but direct hire placements have recently picked up from low levels. Staffing industry contacts were more upbeat in their outlook compared with the previous reporting period.\nContacts in accounting services say strong demand for tax and audit services is outpacing continued weakness in advisory and performance improvement services. Demand for legal services remains sluggish.\nReports from transportation service firms are mixed. Intermodal firms report no change in cargo volumes over the past month as the rise in exports is being offset by a decline in imports. Contacts in railroad transportation cite a widespread increase in cargo volumes, and noted that the outlook is more upbeat than last time. Airline demand appears to be recovering, with leisure travel seeing continued growth, business travel improving and fares stabilizing. Contacts note that demand for air travel is expected to be flat to slightly up this year.\nConstruction and Real Estate\nHousing contacts said new home construction picked up recently in response to relatively tight inventories and the first-time homebuyer tax credit. In both new and existing home markets, sales of lower priced homes remained the strongest. Sales of higher priced homes were weak, reflecting difficulties in obtaining financing for larger loans. Builder outlooks were slightly more optimistic for 2010.\nCommercial real estate activity remains depressed. There is continued downward pressure on rents. Office leasing activity is still falling, albeit at a slower pace. Demand for industrial space declined further in Dallas, but improved slightly in Houston. Investment sales transactions remain low due to the tight lending environment, but contacts report that investors are watching closely for bargains. Commercial construction activity is still weak and outlooks remain grim, with most contacts expecting no improvement until 2011.\nFinancial Services\nFinancial service firms continued to report feeble demand for consumer and commercial loans. Real estate lending remained scarce due to stringent regulatory requirements, and contacts at community banks expressed concern about the possible effects of these regulatory requirements on their ability to expand. Some contacts said they were beginning to see an improvement in loan quality, with falling delinquencies and declining charge-offs. The outlook remained cautious but some contacts were hopeful that they may see a pickup in loan demand by year end.\nEnergy\nDrilling activity rose strongly during the reporting period. Gas-directed drilling grew faster than oil-directed activity, reversing the trend seen in prior months. Oil field activity has improved along with the uptick in drilling, and contacts say capacity is beginning to tighten in selected lines of activity and in some geographic areas. Contacts are hopeful that the current expansion will last through the first half of 2010, as their customers continue to drill in order to secure leases, learn the new shale technology or simply because they anticipate being profitable at current prices.\nAgriculture\nHeavy rains and snowfall have boosted crop and pasture conditions. There is excellent subsoil moisture going into the spring planting season, which has improved the crop outlook for 2010. Though heavy precipitation has been beneficial, it has resulted in some crop losses and could delay spring planting if fields do not dry out in time. Livestock are in fair to good condition, and producers are using supplemental feeding to compensate for the harsh winter weather and wet pasture conditions.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Kansas City

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"Beige Book Report: Kansas City\nMarch 3, 2010\nThe Tenth District economy showed further signs of modest growth in January and February. However, some unexpected weakness was noted in several sectors of the District economy due to bad weather. Consumer spending was flat compared to year ago levels with continued softness in auto sales. Manufacturing activity expanded but did not translate into additional factory hiring. Residential real estate markets continued to benefit from tax credits, while commercial real estate weakened further. District banks reported continued weak loan demand. Energy firms expanded drilling activity, especially for natural gas. In agriculture, growing conditions remained favorable for crops, while profit margins improved for livestock producers. Despite higher input prices, retail prices remained unchanged and little evidence of wage pressures was reported in District labor markets.\nConsumer Spending\nDistrict retailers reported that sales in January and February were weaker than expected and flat relative to last year. Retailers with highly seasonal post-holiday sales noted particular weakness. Some District retailers, especially mall operators, attributed the weakness in sales to winter storms. Retailers nonetheless remained optimistic that a rebound in retail activity will occur in the coming quarter. Light car and truck sales remained in a downward trend but inventories continued to decline and few auto dealers expressed concern with excess inventory levels. The lodging industry noted improved hotel occupancy rates in the January and February survey period. Some hoteliers indicated that the occupancy bounce was likely seasonal in nature but reported improved expectations for both occupancy and room rates. Mountain resort markets registered only a modest rebound in winter tourism relative to year ago activity.\nManufacturing and Other Business Activity\nThe Tenth District's manufacturing and transportation sectors expanded further, although high-tech firms reported weaker business conditions. District manufacturers reported increased production, shipment volumes, and new orders in the latest survey period. District manufacturing activity has increased steadily since last September and production has returned to near year ago levels. Manufacturers remained optimistic that new orders would be higher in six months; however backlogs were minimal and well below year ago levels. Few manufacturing firms increased hiring, though expectations for \r\nfuture hiring improved markedly in the latest survey period. Transportation firms reported a strong cyclical rebound in business activity consistent with continued stabilization in overall District activity. High-tech firms noted weaker business activity along with subdued expectations for improved business conditions in the coming quarter. Current and future expectations of capital spending activity among high-tech firms also diminished in the survey period. The lack of venture capital funding remained a concern for high-tech companies, especially among alternative energy and software development firms.\nReal Estate and Construction\nResidential real estate activity improved slightly while commercial real estate continued to deteriorate. Residential builders reported increased building permits and housing starts. Sales in residential real estate increased modestly but home prices in the District remained flat. Demand remained strong for starter homes but the strength was not expected to continue once the homebuyer tax credit expires in April. Upper end home sales remained depressed. Mortgage refinancing activity decreased amid increasing interest rates. Construction supply firms noted increased activity in residential construction but no movement in commercial. Commercial real estate respondents reported anemic conditions, including decreasing sales volumes, rents and prices, and increasing vacancy rates with little to no expectation of conditions improving in the next quarter. Weakness in commercial construction during the survey period was attributed to poor weather in January and February, while tight lending conditions continued to be cited throughout the industry as an impediment to long run growth. Real estate and construction contacts reported limited contribution from stimulus-funded projects to business activity or hiring in the reporting period.\nBanking\nBankers reported lower loan demand, unchanged deposits, and a slightly improved outlook for loan quality. Overall loan demand declined at about the same pace as in the previous survey. Demand fell moderately for commercial and industrial loans, commercial real estate loans, and consumer installment loans. Demand for residential real estate loans declined modestly. A few banks tightened credit standards on commercial real estate loans but credit standards for other loan categories were little changed. Somewhat fewer banks than in the previous survey reported a decline in loan quality from a year ago. Respondents were also slightly less pessimistic about loan quality in the next six months. For the second consecutive survey, deposits were unchanged. A few respondents said they had little incentive to obtain \r\ndeposits due to lack of loan demand.\nEnergy\nEnergy industry activity continued to expand in the latest reporting period. Natural gas producers expressed cautious optimism that a near term floor had been established for natural gas prices but remained concerned that expanding supplies from shale gas production would push prices down in the future. District rig counts continued to increase in the latest reporting period with improved expectations for drilling-related capital expenditures in the coming quarter. New drilling activity was largely concentrated in horizontal gas wells in Oklahoma. Wyoming coal production remained more than ten percent below year ago levels.\nAgriculture\nAgricultural conditions improved since the last survey period. The winter wheat crop was reported in generally good condition with limited reports of freeze damage due to frigid temperatures and variable snow cover. Extreme winter weather contributed to below average weight gain for cattle and caused producers to provide supplemental feed. Cattle and hog prices strengthened in recent weeks, boosting profit opportunities. Crop prices edged down from their post-harvest peaks. Still, cropland values strengthened following the bumper fall harvest. Ranchland values, however, remained below year-ago levels amid weak demand for pasture ground. Stronger farm incomes led to a rise in loan repayment rates and fewer reports of loan renewals and extensions. District contacts reported ample funds were available for farm loans at historically low interest rates.\nWages and Prices\nRaw materials prices increased although selling prices and wages remained flat. District manufacturers reported raw materials prices pushed above year ago levels in the latest survey period. Two-thirds of District manufacturers expected the upward trend in raw materials prices to continue into the next six months. Selling prices remained flat across the District since the last survey period but were generally below a year ago. Most respondents expected prices to hold steady over the next few months. Firms continued to report little evidence of wage pressures across District labor markets and did not expect any pressure in the near future.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Minneapolis

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"Beige Book Report: Minneapolis\nMarch 3, 2010\nThe Ninth District economy grew modestly since the last report. Consumer spending, services, energy, mining and residential construction and real estate saw slight increases. Tourism was mixed, while manufacturing and commercial construction were stable. Commercial real estate and agriculture were down. Softness in labor markets continued, but the pace of weakening has slowed. Meanwhile, wages were stable and overall price increases remained subdued.\nConsumer Spending and Tourism\nOverall consumer spending increased modestly. A Minnesota-based restaurant and bar chain reported that recent same-store sales were above year-earlier levels. A movie theater in Minnesota reported that ticket sales were up during January. In the Minneapolis area, a \"value-oriented\" mall reported that traffic was up over 5 percent in January compared with a year ago; however, a South Dakota mall reported that traffic was down in January from last year, in large part due to inclement weather. A major Minneapolis-based retailer reported that same-store sales in January were essentially flat compared with a year earlier. A bank director noted that retailers have been willing to take a lower margin on inventory to generate sales activity and cover costs where possible.\nA representative of an auto dealers association in Montana observed that recent business at a number of dealerships improved a bit. However, a Minnesota auto dealer noted that sales of new and used vehicles in January were down substantially, but were picking up somewhat during February.\nWinter tourism was mixed. A representative of a Minnesota travel agency reported that leisure travel increased considerably in January compared with a year ago. Favorable snow conditions helped boost lodging revenue in northwestern Wisconsin. Recent ski visit numbers were relatively flat at a Montana ski resort, while lodging revenue was down due to fewer guests and discounted pricing. Tourism activity was down somewhat in the Upper Peninsula of Michigan, according to a tourism official.\nConstruction and Real Estate\nCommercial construction was steady at low levels. The value of January nonresidential permits in Rochester, Minn., increased from the same month a year earlier; commercial permits in Fargo, N.D., were down from a year earlier. Meanwhile, a $20 million airport terminal building in Duluth, Minn., was in the early stages of development. Residential construction increased. The value of January residential permits in the Minneapolis-St. Paul area increased 16 percent from a year ago. New residential permits in Sioux Falls, S.D., increased 15 percent in value in January from the previous year, and remodeling activity increased as well.\nCommercial real estate continued its slump. Overall vacancy for office, retail and industrial properties in the Minneapolis-St. Paul area reached its highest level in nearly 20 years, even with large decreases in lease prices; the retail sector was particularly hard hit. A commercial real estate firm in South Dakota noted that occupancy was down slightly and businesses were staying with current leases as opposed to expanding. A commercial real estate broker in Fargo said markets there were flat.\nThe residential real estate market saw continued signs of improvement. The January median sales price in the Minneapolis-St. Paul area increased more than 1 percent from the previous January, the first year-over-year increase in 41 months. Home sales in Bismarck, N.D., and Sioux Falls increased as well.\nServices\nOverall activity increased in the professional business services sector since the last report. Contacts from information technology firms reported solid orders but noted some difficulties in collecting fees. Web development firms reported improved activity with backlogs ranging from a few weeks to a few months. A contact from a health care firm indicated that demand for core services was solid, while orders for elective procedures were soft. A bank director noted that legal fees were flat to down from a year ago. A Minnesota architectural firm's recent revenue was lower than a year ago.\nManufacturing\nManufacturing output was flat since the last report. A January survey of purchasing managers by Creighton University (Omaha, Neb.) showed that manufacturing activity was relatively level in Minnesota and the Dakotas. An electronic equipment maker in North Dakota reduced production at two plants. A Montana cement maker restarted production after a three-month shutdown. A plastic pipe producer plans to start a plant in South Dakota.\nEnergy and Mining\nActivity in the energy and mining sectors increased since the last report. Mid-February oil exploration increased from mid-December. Wind energy projects are under construction in the western portion of the District. Meanwhile, activity at Montana copper, platinum and gold mines was brisk during the past few months. Permits were issued for a copper and nickel mill processing facility in the Upper Peninsula. January iron ore production was estimated to have increased slightly from December 2009 levels.\nAgriculture\nAgricultural activity was down. The Minneapolis Fed's fourth-quarter (January) survey of agricultural credit conditions indicated that lenders expect overall agricultural income and spending to decrease in the first quarter. Several winter storms rolled though the District since the last report, causing stress on livestock.\nEmployment, Wages, and Prices\nSoftness in labor markets continued, but the pace of weakening has slowed. Minnesota unemployment insurance claims were up about 3 percent in January compared with a year earlier; however, increases in unemployment insurance claims have leveled off during the past three months. A medical insurer in Minnesota recently announced plans to lay off 150 employees, while a financial firm announced plans to cut 25 positions in South Dakota. By contrast, a business that processes employee applications in Minnesota will hire an additional 50 employees, and a bank recently announced plans to hire more brokers.\nWage rates remained stable. A Montana bank director noted that most business contacts in his area expect no increases in wages or benefits in 2010.\nOverall price increases remained subdued, with some noted exceptions. Bank directors reported price increases in freight and health care costs, and some price hikes in plastics and other petroleum-based products. Meanwhile, construction inputs and bidding prices were down. Some decreases in fertilizer and herbicide prices were expected for the upcoming year. Minnesota gasoline prices were down about 15 cents per gallon in mid-February from mid-January.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

San Francisco

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"Beige Book Report: San Francisco\nMarch 3, 2010\nEconomic activity in the Twelfth District appeared to increase modestly during the reporting period of early January through late February. Upward pressures on prices and wages remained quite limited. Sales of retail items and services generally stayed at low levels, but both showed some improvement. Manufacturing activity was mixed but appeared to pick up further on balance. Sales continued to expand for agricultural producers, while demand for energy resources fell. Home demand appeared to be little changed from the previous period, but demand for commercial real estate continued to slide. Contacts from financial institutions reported that loan demand was largely unchanged and credit standards remained tight.\nWages and Prices\nUpward price pressures were very modest on net during the reporting period. Commodity prices were stable or down in general, with declines noted for natural gas, copper, and aluminum. Weak demand continued to hold down prices for various services and most retail items, with extensive discounting reported for the latter. Nearly three-fourths of respondents anticipate that prices for the goods and services sold in their respective industries will remain largely stable during 2010; of the remainder, the number expecting declines was slightly higher than the number expecting increases.\nContacts in most sectors characterized wages as essentially flat, although some businesses reported significant increases in the costs of employee benefits, especially for health insurance. Upward wage pressures were limited by high unemployment and restricted hiring in most sectors and regions. An overwhelming majority of respondents expect no change in their firm's employment counts for at least the first half of the year, and they expect limited hiring to hold down wage pressures going forward.\nRetail Trade and Services\nRetail sales continued to firm but remained sluggish on net. Both discount chains and traditional department stores reported sales increases, with scattered reports pointing to a slight pickup in consumers' appetites for discretionary spending. Sales were characterized as flat for grocers and retailers of furniture, appliances, and electronic items. New automobile sales slipped somewhat, although the reports suggested that consumer interest rose in recent weeks, perhaps signaling improved sales in the near term. For used automobiles, reduced availability held back sales somewhat and caused prices to rise. Unit sales of gasoline were running slightly below their levels from 12 months earlier, despite modest price declines in recent weeks.\nDemand for services continued to be weak overall but showed signs of improvement since the last reporting period. Sales remained sluggish for providers of professional and media services, although scattered increases in demand were noted for some categories. Similarly, restaurants and other food-service firms stated that they are slowly seeing signs of recovery in demand. Providers of health-care services reported an increase in patient volumes. Conditions remained challenging for businesses in the tourism and leisure sector, although further signs of improvement were reported: contacts in Southern California and Seattle noted that hotel occupancy rates appear to have stabilized, while contacts in Hawaii and Las Vegas noted ongoing increases in visitor volumes.\nManufacturing\nDistrict manufacturing activity remained mixed but picked up further on balance during the reporting period of early January through late February. Demand strengthened further for manufacturers of semiconductors, with high levels of capacity utilization and balanced inventories noted. New orders continued to be very limited for makers of commercial aircraft and parts, but the existing order backlog helped keep production activity at or near the prior pace. Demand and capacity utilization for metal fabricators remained at exceptionally low levels. Manufacturers of wood products also continued to face very weak demand, although a slight pickup was noted. Activity at petroleum refineries remained well below the five-year average levels, prompting refinery closures or sales in some cases.\nAgriculture and Resource-related Industries\nSales grew further for agricultural products, but demand declined a bit for extractors of natural resources used for energy production. Sales rose for assorted crops and livestock products, and reports indicated that inputs were readily available. Contacts noted that favorable weather, including substantial moisture, have enhanced production conditions for crops and livestock. Oil extraction activity and capital spending in that industry continued to be held down by weak global demand, while demand for natural gas slid a bit as a result of unseasonably warm weather in some parts of the District.\nReal Estate and Construction\nDemand for housing appeared to be little changed on net, while demand for commercial real estate slid further. The pace of home sales was mixed across areas but appeared to be largely unchanged after adjusting for normal seasonal variation. Home prices reportedly rose a bit further in some areas of the District. However, the number of available homes for sale remained elevated, which substantially offset builders' incentives to increase the pace of new home construction. Demand slid further for commercial real estate, and tenants continued to push for and often achieve rent concessions and other favorable terms through renegotiation of existing leases. However, one contact noted an increase in leasing activity in some segments of the major markets in the District, as well as slightly improved availability of financing for new commercial development and investment transactions.\nFinancial Institutions\nReports from District banking contacts indicated that loan demand was largely unchanged from the prior reporting period. Consumer loan demand remained weak on net, and commercial and industrial loan volumes continued at low levels, as business owners remained quite cautious about their capital spending and hiring plans. Lending standards continued to be relatively restrictive for most types of consumer and business loans, and contacts reported further loan losses. Venture capital financing remained a bright spot, with contacts noting further improvements in levels of investment funds and IPO activity.\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 13, 2010\nEconomic conditions in some areas of the Eighth District have shown further signs of improvement since our previous report. In general, manufacturing activity continued to decline while service sector activity increased. Early reports from retailers in the District indicate a slight increase in holiday sales compared with a year ago. Residential real estate markets showed signs of improvement in parts of the District, while commercial real estate market conditions remained weak. Overall lending at a sample of small and mid-sized District banks declined in the three-month period from mid-September to mid-December.\nManufacturing and Other Business Activity\nManufacturing activity has continued to decline since our previous report, with persistent weakness in employment. Although several manufacturers reported plans to open plants and expand operations in the near future, a larger number of contacts reported plans to close plants and lay off employees. Firms in the shoe/apparel, furniture, and appliance manufacturing industries announced plans to relocate production to the District. A firm in wood product manufacturing also announced plans to hire additional workers to launch a new product. In contrast, contacts in the electrical components; chemical product; construction materials; machinery; heating, ventilation, and air conditioning; and auto manufacturing industries announced plans to lay off workers, often citing weak product demand.\nThe District's service sector continued to expand in most areas. Contacts in business support services, leisure/hospitality services, and medical services announced plans to hire new workers. A firm in business support services also announced plans to lift a wage freeze and to reinstate benefits. Early reports from contacts in the retail sector generally expressed optimism about increased holiday sales. One contact also noted that small to mid-sized retailers are adding stores to gain long-term market share.\nReal Estate and Construction\nResidential real estate markets are showing signs of improvement in parts of the Eighth District. Compared with the same period in 2008, November 2009 year-to-date home sales were up 1 percent in St. Louis and held steady in Louisville. Over the same period, year-to-date home sales were down 3 percent in Little Rock and 10 percent in Memphis. Residential construction continued to be weak throughout most of the District. November 2009 year-to-date single-family housing permits fell in most District metro areas compared with the same period in 2008. Permits declined 6 percent in Little Rock, 16 percent in St. Louis, 18 percent in Louisville, and 36 percent in Memphis.\nCommercial and industrial real estate market conditions remained weak throughout most of the District. A contact in St. Louis noted that commercial real estate has stalled. A contact in Memphis noted that the focus now is on retaining tenants rather than recruiting new ones. A contact in south-central Kentucky reported that while commercial construction is relatively strong, it consists mainly of education-related projects. Industrial real estate and construction contacts throughout the District also reported a sluggish environment. A contact in Memphis does not expect the industrial real estate market to improve until signs of a more sustainable recovery are evident.\nBanking and Finance\nTotal loans outstanding at a sample of small and mid-sized District banks decreased 2.1 percent in the three-month period from mid-September to mid-December. Real estate lending, which accounts for 73.5 percent of total loans, decreased 1.6 percent. Commercial and industrial loans, accounting for 16.5 percent of total loans, decreased 3.5 percent. Loans to individuals, accounting for 5.3 percent of loans, decreased 2.2 percent. All other loans decreased 4.0 percent and accounted for 4.7 percent of total loans. Over this period, total deposits increased 2.0 percent.\nAgriculture and Natural Resources\nAs of mid-December, year-to-date bales of cotton ginned (separated from the seed) in the District states were down by 31 percent over the same period in 2008. Arkansas had 36 percent fewer bales ginned than the previous year, Mississippi had 40 percent fewer, Missouri had 29 percent fewer, and Tennessee had 10 percent fewer. In November, total commercial red meat production in District states was 2 percent higher compared with year-earlier levels, but year-to-date production was 1 percent lower compared with year-earlier levels. Also, the total weight of young chickens slaughtered was 3 percent higher than the previous November, but year-to-date totals were 7 percent lower. Total coal production in District states in December was 4 percent lower than the previous December, while total coal production in 2009 was 4 percent higher than in 2008.\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 13, 2010\nEconomic activity in the Twelfth District appeared to pick up slightly during the reporting period of December through the beginning of January. Upward pressures on prices were quite modest, and upward pressures on wages were virtually nonexistent, despite sustained productivity gains in some sectors. Holiday season retail sales were up from the preceding year but were slow compared with prior years, while demand for services remained weak on net. Manufacturing activity continued at very low levels for some product lines but appeared to improve further on balance. Agricultural producers reported solid sales, while demand was mixed for providers of energy resources. Conditions in housing markets appeared to be largely stable, but demand for commercial real estate continued to deteriorate. Contacts from financial institutions reported mostly stable loan demand and further declines in credit quality.\nWages and Prices\nUpward price pressures were quite limited during the reporting period. Commodity prices in general were stable, although contacts noted increases for selected commodities such as natural gas, aluminum, and zinc. Substantial discounting continued to hold down final prices for a variety of retail items, and persistently weak demand further reduced the prices for various services, notably lodging and professional services.\nUpward wage pressures were largely absent, as compensation gains were held down by high unemployment and limited hiring in most sectors and regions. The majority of contacts expect that the pace of productivity improvements achieved in their respective industries over the past year will continue in 2010; they therefore expect hiring to remain subdued for a prolonged period, even if product demand improves.\nRetail Trade and Services\nRetail sales improved modestly but remained somewhat weak on net. Discount chains and traditional department stores alike reported that holiday season sales were up slightly compared with 2008, although contacts in general cautioned that sales were still well below the levels recorded in 2007 and prior years. Consumers continued to emphasize necessities and lower-priced options for many types of consumer goods. However, further demand improvements were noted for some nonessential and higher-priced items, including furniture and household appliances. Sales of new automobiles remained very weak overall, although improvements in demand were noted for larger vehicles such as SUVs. Sales of used automobiles strengthened, reportedly spurred in part by price declines arising from increased supplies of formerly leased or rented vehicles.\nDemand for services continued to be weak overall. Sales slid further for providers of professional services, notably advertising and accounting, and providers of real estate services such as title insurance reported that activity was largely stable at low levels. By contrast, providers of health-care services reported improved demand and increased patient volumes during the reporting period. Travel and tourism activity in the District was mixed: contacts in Southern California and Seattle noted that occupancy rates were down, while contacts in Hawaii and Las Vegas pointed to further improvements in visitor volumes. Activity was especially sluggish in the business travel segment of the market, which continued to place downward pressure on airline passenger volumes and traffic.\nManufacturing\nDistrict manufacturing activity was mixed but showed modest improvement on net during the reporting period of December through the beginning of January. Manufacturers of semiconductors reported further strengthening in demand, with rising sales and balanced inventories noted. Makers of commercial aircraft and parts saw limited new orders, but an existing order backlog combined with a decline in delivery deferrals kept production activity largely stable at moderate levels. By contrast, production activity remained at extremely low levels for metal fabricators, for whom demand has been very weak for an extended period. Manufacturers of housing products such as windows and doors also reported that new orders remained very low, causing them to keep inventories unusually lean. Similarly, production activity at petroleum refineries remained well below the five-year average as producers attempted to reduce excess inventories.\nAgriculture and Resource-related Industries\nDemand for agricultural products was solid, with further sales gains noted, while demand was mixed for extractors of natural resources used for energy production. Sales expanded for assorted crops, and inputs remained readily available with generally stable prices noted. The lower exchange value of the dollar caused overall demand and prices to rise for selected commodities with extensive overseas markets, such as cotton. Oil extraction activity remained at low levels as the price of oil slid a bit. By contrast, demand for natural gas rose in response to the onset of cold winter weather in much of the District, prompting reactivation of some dormant wells.\nReal Estate and Construction\nDemand for housing appeared to be largely stable, while demand for commercial real estate eroded further. After accounting for normal seasonal variation, the pace of home sales was mixed across areas but appeared little changed on net compared with the previous reporting period; contacts noted that low mortgage interest rates helped to sustain sales in general. However, an extensive supply of foreclosed properties in some areas caused inventories to remain somewhat elevated, which in turn has restrained the pace of new home construction. Demand weakened further for commercial real estate, with vacancy rates for office and industrial space rising further in many parts of the District. However, one contact in the Pacific Northwest noted that the market may be approaching a bottom, citing an increase in leasing activity in response to favorable terms for tenants.\nFinancial Institutions\nDistrict banking contacts reported that loan demand was largely stable compared with the prior reporting period, while credit quality declined further. Demand for commercial and industrial loans continued to be restrained by businesses' uncertainty about the economic environment and resulting caution in their capital spending plans. Demand for consumer loans also was characterized as largely unchanged at low levels. Contacts reported additional loan losses and continued tight standards for business and consumer lending. Further small improvements in venture capital funding and IPO activity were noted.\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 13, 2010\nThe Tenth District economy expanded more modestly in late November and December than in the previous survey period. Overall holiday consumer spending was little changed from a year ago, but sales in some areas were hampered by extremely bad year-end weather. Growth in manufacturing activity moderated from the previous survey, and businesses' capital spending plans remained modest. The rebound in residential real estate lost some steam, and commercial construction activity weakened further. Bank loan demand remained sluggish, and overall loan quality was poor. By contrast, energy activity continued to rise from low levels, and agricultural conditions improved. Price pressures were limited, and wage pressures remained low due to weakness in the labor market.\nConsumer Spending\nConsumer spending growth softened somewhat from the previous survey. Overall, holiday retail sales were little changed from a year ago. Some contacts reported slight increases from a year ago, but extremely bad weather limited holiday sales in other areas. Store managers generally reported stronger sales of discounted items and winter gear, while sales of luxury items such as jewelry were relatively weak. Store inventories were up slightly, but most contacts expected a decrease in the months ahead. Restaurant traffic edged up marginally from the previous period, and expectations were more positive. Auto sales dropped after steadying in the previous survey, though most dealers expected some improvement in future months. Auto inventories were still fairly high and expected to rise, and some contacts noted continued difficulties obtaining customer financing. Travel and tourism activity weakened further, with one contact noting considerably less business travel. Nearly all tourism contacts expected a continued slowdown in activity.\nManufacturing and Other Business Activity\nGrowth in manufacturing activity moderated somewhat in late November and December, while other business activity was mixed. Overall growth in factory production slowed, while employment remained essentially flat. Plant managers also reported smaller gains in shipments and new orders. Expectations for future factory activity were slightly less optimistic than in previous surveys, but factory output was still expected to rise moderately in the first half of 2010. Transportation services activity slowed slightly in late November and December, but contacts expressed more optimism about future months. High-tech services firms reported mostly favorable business conditions and were generally positive about the months ahead. Despite generally positive outlooks, businesses' capital spending plans--especially among manufacturers--were fairly modest for 2010, as considerable excess capacity remains. Still, some business spending was occurring to replace outdated IT and other equipment.\nReal Estate and Construction\nResidential real estate activity eased somewhat after a rebound in the previous survey, and the downturn in commercial real estate activity continued. Housing starts dampened slightly, as several builders noted continued financing difficulties, but expectations improved from the previous survey. Home sales also eased from the previous survey, but levels were higher than a year ago and expectations strengthened due to the renewed homebuyer tax credit. Sales were strongest in the low-end market, with continued weak demand for higher-priced homes.Several real estate agents reported sales were limited by tighter credit restrictions and appraisal guidelines. Mortgage lenders reported that overall mortgage activity edged down slightly from last month, with fewer home purchase and refinancing loans. Commercial real estate activity continued to deteriorate across the District, with few improvements expected in the near future. Vacancy rates continued to rise, and prices and rents declined further. Construction supply firms reported especially weak sales, which most contacts attributed to a slowdown in lending and weak commercial construction activity.\nBanking\nBankers reported weaker loan demand, stable deposits, and a continued negative outlook for loan quality. Overall loan demand declined at a somewhat faster pace than in the previous two surveys. Demand fell moderately for both commercial and industrial loans and commercial real estate loans. In addition, demand for residential real estate loans and consumer installment loans edged down. A few banks tightened credit standards on commercial real estate loans. As in the previous survey, however, credit standards for other loan categories were little changed. When asked about the cause of the continued weakness in bank lending, two-thirds of respondents cited weak demand from creditworthy borrowers, and some banks mentioned pressure from regulators. Almost all respondents reported lower loan quality than a year ago, and about a third expected loan quality to decline further in the next six months. Deposits were essentially unchanged, following several months of steady growth.\nEnergy\nEnergy activity was up modestly from the previous survey, but remained below year-ago levels. Most contacts reported an increase in drilling activity and were optimistic about the months ahead, as crude oil prices remained relatively high and natural gas prices finally turned upward. With natural gas inventories still at historically high levels, however, some producers worried that gas prices might fall if recent cold winter weather across the country did not continue. Most energy firms expected their capital expenditures to increase or remain unchanged over the next twelve months, with very few planning decreases.\nAgriculture\nAgricultural conditions improved since the last survey period. Farmers enjoyed above average corn and soybean yields, especially in Nebraska and Kansas. Despite planting delays, the winter wheat crop was progressing normally and was reported in good condition with ample snow cover. The post-harvest rise in corn and soybean prices spurred strong marketing opportunities and higher incomes for farmers. Livestock prices moved higher, narrowing losses for producers. Cattle feeding enterprises were operating at breakeven levels, but dairy and hog operations still faced significant losses. District contacts reported that farmland values firmed in the fourth quarter amid robust demand for good quality farmland and a limited number of farms for sale.\nWages and Prices\nPrice pressures were modest, and wage pressures remained limited due to weak labor markets. Manufacturers reported mostly stable prices, but some noted lower profit margins due to rising commodity prices and little ability to pass through. Overall retail prices continued their downward trend, and most contacts expected prices to fall further in coming months. However, builders and transportation firms reported a slight uptick in input prices. Almost no firms reported labor shortages, resulting in little if any wage pressures. Hiring plans at many firms also remained minimal, which some firms attributed to uncertainty surrounding future employee health care costs.\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 13, 2010\nEconomic conditions in the Eleventh District continued to firm up over the past six weeks. Contacts in several industries, most notably retail, high-tech manufacturing and staffing services, reported improved demand. While conditions appeared to be recovering in many sectors and outlooks were becoming more positive, most contacts only expected a slow and modest improvement in the near term.\nPrices\nPrice pressures were generally subdued, with a few exceptions. Intermodal firms continued to drop prices to attract new customers, and legal, staffing and accounting service firms noted ongoing pressure to discount fees. Pricing of construction-related materials remained very competitive. In contrast, staffing firms said that a large increase in the state unemployment insurance tax in January 2010 will significantly raise costs and squeeze margins as pass-through to clients has been mixed. Airlines noted that fares were stabilizing, and retailers said prices were reverting back to relatively normal levels. Paper and corrugated-box manufacturers reported rising raw material costs and an uptick in selling prices. There were also reports of slight increases in crop and industrial metal prices.\nCrude oil prices briefly fell below $70 during the reporting period, but have climbed back up to near $80. These gains have been driven by improved economic data, longer-term dollar weakness, and conflicts involving Russia, Iran and Nigeria. Contacts noted that proposed price increases for polyethylene and polypropylene did not stick in December. Prices of other chemical products were stable. Despite recent increases in natural gas prices due to cold weather, contacts said high inventories, weak industrial demand and rising production point to continued weakness in natural gas markets.\nLabor Market\nMost respondents noted stable employment levels. Still, a few construction-related manufacturing firms continued to report payroll declines. Contacts in the energy industry reported that several firms had announced plans to reorganize operations and move a large number of professional jobs overseas. On a positive note, an aircraft components manufacturer noted an uptick in staff levels, and a primary metals manufacturer reported an increase in work hours. Retailers said holiday hiring was reasonable.\nWage pressures were mostly nonexistent but a handful of firms said they planned on giving small pay increases next year. Although employer matches to 401(k) plans remained suspended at most firms, one company reported plans to partially reinstate employer contributions to retirement plans.\nManufacturing\nConstruction-related manufacturers reported continued weakness in demand. Most contacts say there is excess capacity in the industry, and capital spending plans are on hold except for maintenance-related projects. The outlook remains bleak, especially for manufacturers tied to commercial construction. Fabricated metals producers noted no change in demand.\nContacts in high-tech manufacturing report orders and sales continue to grow at a moderate to strong pace, partly due to continued improvement in the world economy. One respondent noted that Windows 7 was helping personal computer sales, and that demand for smart phones and laptops was increasing strongly. Inventories remain very lean but at desired levels. The outlook is for continued moderate to strong growth over the next six months.\nReports from transportation manufacturers were mixed. Aircraft components manufacturers reported a seasonal decline in demand, but remained positive in their outlook for next year. Manufacturers of emergency vehicles noted a slowdown in the pace of orders, and added that thinning backlogs were pointing to a potential slowdown in business around mid-2010. Demand for corrugated packaging continued to improve, and outlooks for 2010 were optimistic. Food producers reported a seasonal pickup in demand.\nDemand for petrochemicals was little changed. Modest gains in domestic demand continued but growth in exports slowed somewhat. Contacts say with new petrochemical facilities coming on line in the Middle East, processors are holding back on building inventories until they see the effect of these new facilities on U.S. exports.\nRetail\nRetail activity increased during the reporting period, and retailers said that the holiday season was shaping up to be a reasonable one. Discount stores reported an uptick in demand for non-food items, with sales of electronics and household goods faring better than expected. Department store sales were also ahead of expectations. Still, discounting was prevalent as consumers remained price-conscious. The outlook is cautiously optimistic, with contacts expecting a slow recovery in business.\nAutomobile sales held steady over the past six weeks. Contacts say the worst has passed, and they expect demand to remain flat in the near term.\nServices\nStaffing firms said demand for contract work continued to improve but orders for direct hires were flat at low levels. Although orders were widespread across sectors, demand was strongest for call center, clerical, healthcare administrative and manufacturing staff. Demand for legal services remains depressed, but contacts noted a slight uptick in inquiries from clients on merger and acquisition-related services. Accounting firms reported steady demand for their services.\nReports from transportation service firms were mixed. Intermodal firms reported no improvement in cargo volumes over the past month as imports have dropped and exports are not picking up as expected. Small parcel shipping and large freight volumes increased further, continuing a trend that began in the summer. Contacts in railroad transportation noted continued declines in cargo volumes as increases in grain, chemicals, petroleum products and automobile shipments were more than offset by declines in shipments of coal, pulp, paper, lumber, wood, crushed stone and metals. Airline demand appears to be recovering, fares are stabilizing, and contacts note that the outlook is slightly brighter for 2010.\nConstruction and Real Estate\nNew and existing home sales rose over the past six weeks. Homebuilders said that while overall starts remained at low levels, the momentum from the homebuyer tax credit was helping demand, especially in the entry-level segment. Prices continued to firm. Several contacts said smaller builders were still unable to access credit to finance new construction. Outlooks were guarded but optimistic.\nConditions in the apartment sector were weak, as occupancy rates continue to fall and rents are edging down. Elevated construction activity has led to an oversupply of apartments, although contacts say activity will slow in the near term. Outlooks are modestly optimistic. Respondents expect a recovery in most of the major Texas markets in 2010.\nOffice and industrial leasing activity remained feeble. Contacts said \"nothing is going on and business is very slow.\" There is still some concern over how commercial real estate loans will be worked out as they come due, given the decline in collateral value. Investor interest continues to rise, however, with one respondent reporting a significant increase in the number of bids for properties on sale.\nFinancial Services\nLoan demand remained soft. Commercial real estate lending was scarce, and community banks continued to curtail residential real estate lending due to tough regulatory requirements. Loan pricing was slowly returning back to \"normal,\" as some contacts have removed pricing floors or returned to original base rates such as prime. Deposit growth was steady but credit quality continued to deteriorate. Despite weak conditions, contacts at most financial services firms--excluding those that failed--said they have managed to end the year with flat or very modest growth in loan volumes. The primary concern among most contacts is still the uncertainty surrounding impending regulation. The outlook remained cautious and most contacts said they did not expect any significant improvement until at least fourth quarter of 2010.\nEnergy\nThe rig count continued to rise over the past six weeks. Current oil prices are driving up most types of oil-directed drilling activity. The increase in shale-based natural gas drilling, however, remains focused in a few areas, with some traditional gas-bearing regions continuing to see consolidation and downsizing.\nAgriculture\nRainfall continues to boost agricultural conditions across the state. Farmers have been able to plant the winter wheat crop into moist soil. Nearly all crops have been harvested, and the crop outlook for 2010 has improved. Although drought conditions have been alleviated, the dry spell has tightened producers' cash flow and contacts say delayed disaster payments may prevent some farmers from planting the next round of crops.\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 13, 2010\nEconomic reports across the Fifth District varied in our latest assessment, with a few major sectors reporting moderate contractions over the last month. On the downside, both retail and services firms reported declining revenues, continuing a pattern that had been in place for some time. Manufacturing activity, which had been edging higher since spring, turned down in December, although furniture and textile makers reported an uptick in demand. On the more positive side, both import and export activity at District ports improved, and banking activity received a modest boost, particularly from increased lending for equipment. Conditions in the real estate sector were little changed from our last report, but some encouraging signs were noted in office and retail leasing. Finally, both tourism and temporary employment services reported mixed results for activity over the past month; temporary employment, however, is expected to improve over the near term.\nRetail\nRevenues generally declined at retail businesses in recent weeks, although a few contacts reported some improvement in sales. Managers at most department stores said sales fell; several grocery store managers also reported a drop in sales even as customer traffic increased. Big-ticket sales languished, notably at automobile dealerships. However, an executive at a hardware chain in central Virginia reported that revenues and customer traffic were up slightly, which he attributed, in part, to \"a little movement\" in the local housing market. A contact representing several retail establishments also reported revenue growth at small and mid-sized stores despite early discounts, and a manager at a large North Carolina bookstore said customer traffic was \"hopping.\" A severe snowstorm the weekend before Christmas had a mixed effect on holiday sales, with reports of sales activity ranging from \"through the roof\" to dramatic declines. However, retail job cuts were more widespread since our last report; retail wages were flat, and prices moved up further.\nServices\nRevenues at most services firms declined since our last report, but contacts at financial services establishments reported a bit of strengthening in mid-December. Managers at hotels and restaurants reported slower business and specialty contractors continued to experience declining revenues, while demand for services was unchanged at most business-to-business services providers. However, several contacts at financial services firms reported an uptick in revenues--one manager described the mood by saying there was a little more optimism about the markets, but his clients were not optimistic about the economy yet. He quipped, \"The economy is still in intensive care.\" Employment and wages edged down slightly at services firms; prices were unchanged since our last report.\nManufacturing\nDistrict manufacturing slipped in late November and December, although there were some signs of cautious optimism. Contacts reported widespread weakness across shipments, new orders and employment. A window manufacturer said that his business was closing three warehouses and one manufacturing plant in order to align his company to the continued weak economy. A producer of machinery noted that he had experienced the worst month in over a decade and indicated that, if he did not see some improvement after the first of the year, he was not sure how long his company would survive. A textile manufacturer said that, \"We have turned the corner,\" but added that the biggest issue was getting credit for his customers. A furniture manufacturer noted that residential furniture sales had improved somewhat, although commercial sales remained very soft. A producer of electrical components indicated that export business carried his firm during weak domestic demand. Contacts reported that raw materials prices increased at a slower pace and finished goods prices changed little from a month ago.\nPort authorities in the District reported moderate but widespread gains in export and import activity in November and early December, compared to earlier months this year. Several port officials reported both an increase in the number of vessels and the amount of cargo being carried per vessel since the start of the fourth quarter. Shipping lines, according to one official, have adapted \"super slow\" shipping policies (running ships at slower speeds to conserve fuel), because capacity is abundant and fuel costs are high. High-end vehicles led import gains. Other types of heavy cargo, as well as container goods, also crept up from third-quarter levels.\nFinance\nLoan demand was generally described as either unchanged or slightly higher since our last report, with modest gains noted particularly for equipment spending. While consumer and mortgage loan demand was weak, commercial demand increased in some areas of the District. Several bankers cited examples of small businesses replacing and in some cases expanding their purchase of new equipment; in many instances the borrowers were aided by Small Business Administration programs that guaranteed a portion of the loan. One banker reported that increased spending on public infrastructure contributed to a major purchase of heavy equipment by a construction firm. Nonetheless, most bankers reaffirmed that small businesses were still experiencing a large number of loan rejections due to tight credit standards and weak earnings. Indeed, lending activity remained well below year-ago levels, and several bankers in less urban areas of the District stated that demand was weak, continuing the trend of the last several months.\nReal Estate\nResidential real estate agents gave mixed signals on house sales activity in the Fifth District. The Fredericksburg housing market had steady sales and a local agent noted that the tax credit program was \"keeping people in the game.\" However, in Richmond, a contact reported that while buyers continued to look, few had shown urgencies in making offers. Several respondents expressed concern for their markets once the federal tax credit program ends and interest rates start to rise. One contact noted that some banks anticipated a large number of spring foreclosures and were accepting lower prices on the real estate they owned. House prices remained generally steady across much of the District. However, weak consumer confidence remained a constraint. Contacts across the District reported that houses priced in the low-to-middle range remained their best sellers, while sales in the higher price range were rare.\nWhile the sales side of commercial real estate markets remained anemic, agents in the District reported an uptick in office and retail leasing activity over the last two months. Several agents noted that landlords were lowering their leasing rates in exchange for an extension of the length of the lease. In addition, one agent stated that more businesses were making decisions to either expand or upgrade their current facilities. One agent noted that national retail chains, attracted to the relatively low unemployment rates across the District, were actively seeking new sites in anticipation of an expansion in retail spending when the economy improved. In most cases, demand for retail space was also being driven by bargain hunters trying to take advantage of low rental rates. However, one agent noted that retail space in small strip malls was still suffering from high vacancy rates, while downtown retail space was generally in \"good shape.\" Finally, government agencies were identified by one agent as a key source of leasing demand and, in some cases, were the motivation behind new office construction in the area.\nTourism\nAssessments of tourist activity varied since our last report. Contacts along the coast generally reported that bookings were somewhat weaker, which they attributed to people's lack of confidence in the economy. An hotelier at Virginia Beach and an analyst on the Outer Banks of North Carolina said that tourists were looking for deeply discounted packages. In addition, holiday party bookings were practically nonexistent because groups were having their office Christmas parties on-site. Tourism contacts in Virginia and in the Carolinas characterized consumer spending habits as somewhat weaker than a year ago. They noted that consumers were eating out less than ever before, despite the \"specials\" offered at area restaurants. On a brighter note, respondents at ski resorts reported an historically high number of bookings, which they credited to significant snow accumulation from a major snowstorm that struck the Atlantic Coast on the last weekend before Christmas. A manager at a ski resort in Virginia said that visits were up 40 percent--the highest number of visits in the last 20 years.\nTemporary Employment\nTemporary employment agents gave mixed reports on recent demand for workers across the District, but were upbeat about future demand. Several agents in Raleigh reported generally improving demand and expected even more strengthening in the coming months. One agent reported that many of his customers were both filling vacant positions and expanding hiring. Another agent noted that several manufacturing companies were hiring contract workers. However, other manufacturing clients were very apprehensive about hiring due to concerns over the underlying strength of their order books. In addition, several agents reported weak demand over the past six weeks, but expected stronger demand over the next six months. A Hagerstown agent expected stronger demand for workers due to a slight improvement in the overall economy. Likewise, a Richmond agent was optimistic about stronger demand for workers at her agency in the near future, due also to some signs, albeit slight, of economic recovery as well as actual improvements in selected divisions of the agency. In general, among the most available positions were in warehouse and distribution centers, general and day labor, and administrative, sales, and quality assurance.\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 13, 2010\nFirst District business contacts report that activity has picked up in recent months. For retailers and some advertising and consulting firms, the pickup has led to flat to positive year-over-year sales, while manufacturers' revenues mostly remain below year-earlier levels. A couple of commercial real estate contacts see very modest improvement while others remain downbeat; residential real estate sales (but not prices) are up substantially in response to the 2009 new homebuyers' tax credit. Prices are generally said to be stable, except for selected metals prices, which are reported to be rising. With some exceptions, First District business respondents say employment is level or up slightly; some firms intend to raise pay levels modestly in 2010. The outlook remains cautious.\nRetail\nContacted retailers in the First District report mostly positive sales results for the months of November and December. Same-store sales vary from flat to positive mid-single-digits year-over-year. Respondents say sales and holiday spending are better than expected overall and that consumers seem to be more willing to make discretionary purchases. Most also believe, however, that consumers are much more cautious today than in previous years; as one contact said, \"people are not going to be so quick to go into debt in order to buy a $1,000 handbag.\" All respondents are cautiously optimistic in their outlook; none expects robust sales in 2010, although some are more upbeat than others.\nContacts continue to manage inventory levels cautiously, with several retailers reporting that levels have been intentionally decreased from prior year. Capital spending also remains carefully controlled, with some contacts cautiously increasing spending in ways they believe will enhance the company's long-term growth potential. Respondents are increasing headcount in line with new store openings and say hiring restrictions have been removed in order to take advantage of available talent. A few contacts indicate that merit increases have been restored. Selling prices are reportedly stable.\nManufacturing and Related Services\nMany manufacturing and related services contacts headquartered in the First District report quarter-over-quarter improvements in demand during the final months of 2009. For the most part, gains in sales or orders are characterized as slight, selective, or from a depressed base. Some capital goods and consumer durables manufacturers either have seen no improvements to date or have experienced setbacks in demand after a short period of improvement. The most robust sales gains are due to rising Asian and defense-related demand; European, energy-related and commercial-construction-related demand are described as depressed or weakening. Most manufacturing contacts characterize their inventory levels as tight or under tight management.\nManufacturers report that metals prices are rising, but that most other materials costs continue to hold steady. Some respondents are planning to raise prices for services or nondurable products. After a period marked by price erosion, a maker of building equipment is considering raising selling prices in response to higher metals costs; on the other hand, a furnishings manufacturer reports continued downward pressure on prices and no ability to pass along higher input costs. Most other contacts indicate that selling prices are holding steady.\nHaving reduced employment levels over the past year, most contacts are now holding domestic headcounts relatively steady or increasing them modestly. Some anticipate making further reductions in 2010, however. Manufacturers' budgets call for merit pay increases of under 3 percent in the coming year. Many firms expect to adjust the timing and/or magnitudes of pay and benefit adjustments in response to business developments.\nManufacturing respondents are planning for level or slightly higher capital spending in the New Year, mostly financed internally. Contacts indicate that they have adequate plant capacity to meet somewhat higher demand. Some firms are planning new investments in IT, factory reorganization, or product development. Several respondents mention the possibility of making acquisitions.\nManufacturers and related services providers are guardedly optimistic about business conditions over the coming 6 to 12 months. Contacts expect growth in revenues and profits, but they cite a variety of factors that are likely to constrain the extent of recovery or possibly even derail it.\nSelected Business Services\nThe majority of First District advertising and consulting contacts report positive results in the fourth quarter, with demand rising up to 30 percent quarter-over-quarter. On a year-over-year basis, business ranged from down 25 percent to up 23 percent. Demand from private equity firms is starting to pick up, but continues to be very slow. Fewer uncertainties about health care reform are driving up demand from healthcare and biotechnology companies. Demand from educational institutions, from the government, and from the tourism sector is strong as well.\nContacted companies continue to experience price pressures but are managing to hold prices steady or to negotiate supplier's prices in the fourth quarter. Contacted firms plan to raise prices by 3 percent to 10 percent in 2010. Hiring will increase in most firms to hold workforce stable or to increase headcounts to keep up with sharp demand increases. Base compensation will go up modestly--by 2 percent to 5 percent--in 2010. Bonuses in some firms are expected to be much higher next year than this.\nContacted advertising and consulting firms say they are either cautiously or very optimistic about next year's outlook. Projections of demand growth range from zero percent to 50 percent. Cost controls, increases in demand, and new sales strategies are expected to drive profitability up in 2010.\nCommercial Real Estate\nWhile some contacts remain downbeat about the region's commercial real estate market, others note modest improvements in market conditions. Reports of leasing and sales activity are somewhat mixed. Activity is \"very limited\" in Hartford and, according to one contact, \"very slow\" in Boston. However, another Boston contact reports a modest increase in office leasing volume in recent weeks--at rock-bottom rents--and a Providence contact perceives an increase in deals under negotiation. While one contact describes Boston's investment sales market as \"dreadful,\" another reports that volume is higher recently than it was earlier in the year. In Hartford, deals consist of short-term renewals of expiring leases, in which tenants have been willing to pay asking rents in exchange for flexibility on the lease term. In Providence, tenants continue to drive very hard bargains on both rents and improvements. A contact at a Boston-based mutual bank noted an increase in commercial real estate loan delinquencies and in the number of borrowers asking to restructure loans based on anticipated repayment problems.\nTwo contacts currently express greater optimism concerning the outlook for 2010 than in the previous report, while others remain pessimistic or uncertain. The sources of optimism include anticipated demand for commercial space by the public sector, positive GDP growth forecasts, and stock-market-related improvements in investor sentiment. Sources of pessimism include weakness in retail sales, slow employment growth, and looming bank failures related to commercial real estate loans.\nResidential Real Estate\nHome and condo sales in New England increased significantly in November 2009 compared to the previous November. Much of this increase can be attributed to the original November 30th deadline for the first-time homebuyer tax credit. Although the tax credit has since been extended and expanded, many consumers earlier set up deals for November closings to take advantage of the credit they thought would not be available after the month ended. Thus, November home sales increased from 50 percent to 75 percent year-over-year across the region. In addition to the expiring tax credit, contacts attribute the steep year-over-year increases to the fact that November 2008 was a particularly poor month for home sales because of the stock market collapse in the fall of 2008. Nevertheless, pending sales numbers in November looked strong in Boston and the rest of Massachusetts, suggesting that sales may continue to increase in the coming months, at least until the new tax credit expires. Contacts are concerned, however, that ongoing declines in inventory in Massachusetts and Rhode Island will constrain sales unless the expansion of the tax credit to \"move-up buyers\" brings more sellers into the market.\nHome prices did not show as much improvement as sales in November. Median prices declined modestly year-over-year in New Hampshire and Maine, while increasing by about 1 percent in Massachusetts and Rhode Island. However, as in recent months, median prices were probably affected by the concentration of sales among first-time homebuyers. Condo markets also saw large sales increases and moderate price declines in November.\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 13, 2010\nEconomic conditions in the Third District have been mixed since the last Beige Book. Manufacturers, on balance, reported a modest increase in shipments and new orders. Retailers indicated that sales increased marginally for the holiday shopping period compared with a year ago. Motor vehicle dealers indicated that sales have improved slightly. Third District banks continued to report decreases in loan volume outstanding and further declines in credit quality. Residential real estate agents and home builders said sales were seasonally slow in December following an increase in November. Nonresidential real estate leasing, purchase, and construction activity continued to decline. Business firms in the region indicated that prices of most goods and services have been steady, although reports of higher commodity prices have become more widespread since the last Beige Book.\nThe consensus among Third District business contacts is that business conditions will improve slowly in most sectors during the first half of 2010. Manufacturers forecast a rise in shipments and orders during the next six months, on balance. Retailers expect sales to rise if overall economic conditions improve. Auto dealers expect sales in 2010 to be somewhat above the level in 2009. Bankers expect demand for credit to pick up by mid-year. Residential real estate contacts believe housing demand will rise as spring approaches. In contrast, contacts in nonresidential real estate expect leasing and construction to remain weak through most of the year.\nManufacturing\nThird District manufacturers reported increases in shipments and new orders, on balance, from November to December, although the number of firms posting gains did not exceed the number recording declines by a wide margin. Makers of food products, furniture, and chemicals noted increased demand for their products. Declines in demand were reported from most of the other major manufacturing sectors in the District. Firms reporting increases in orders generally indicated that the gains have been slight. One said that \"business is getting a little better, but nothing to write home about,\" and another said that \"we're keeping busy but it's hand to mouth; there's no backlog.\"\nThird District manufacturers expect business conditions to improve during the next six months, on balance. Among the firms polled in December, about four-tenths expect new orders and shipments to increase during the first half of the year; about two-tenths expect decreases. Several firms noted that the outlook for future taxes, health-care regulations, and energy costs were negatively affecting their expectations as well as those of their customers. Although the area manufacturers planning to increase capital spending outnumber those planning to decrease capital spending, the positive ratio has not increased since the last Beige Book.\nRetail\nThird District retailers reported marginal year-over-year increases in sales, on balance, for December. A snowstorm on the weekend before Christmas curtailed shopping, and many stores closed. However, many stores were open for extended hours in the four days before Christmas, and several retailers estimated that they recouped sales lost on the weekend. Several Third District retailers noted that the sales improvement for the 2009 holiday period compared with 2008 did not represent a significant shift in the sales trend. Poor results in 2008 made a gain for 2009 easier, according to this view. Looking ahead, store executives say sales will increase significantly only if employment and financial conditions improve.\nSome Third District auto dealers reported improvement in sales in December, although, for most, sales have been roughly steady. Dealers said financing for buyers has become somewhat more available, helping to support the sales rate. Looking ahead, dealers expect total sales in 2010 to slightly exceed sales in 2009.\nFinance\nTotal outstanding loan volume at Third District banks continued to slip in December, according to bankers contacted for this report. Bankers said lending activity has been soft in nearly all major consumer and business credit categories, mainly due to slack demand, although some lenders reported slow growth in their auto lending. Besides low demand, some bankers indicated that overall loan volume was declining because of write-offs. Credit quality remained a concern for Third District bankers. Although most of those contacted for this report said delinquencies and defaults have been rising less rapidly recently than they had through most of 2009, bankers expect charge-offs to remain high for some time.\nLooking ahead, Third District bankers see slow loan growth starting around mid-year as the economy recovers and loan demand picks up. Until then they expect write-offs and the continuation of stringent credit standards to limit expansion in lending. One banker said that \"standards of lower loan-to-value ratios and higher credit scores are being maintained and that will limit loan growth,\" and another said that \"we are focused on preserving capital and minimizing future losses.\"\nReal Estate and Construction\nSales of new and existing homes were seasonally slow in December after a gain from October to November, according to local real estate agents and home builders. Real estate agents said the number of homes listed for sale remained high relative to the sales rate, and average selling prices continued to fall. Most of the real estate agents surveyed for this report characterized the market as \"stabilizing\" or \"hitting the bottom.\" They expect sales to rise in the spring with a boost from the extended home-buyer federal tax credit. However, they do not expect sales prices to begin to move up with the expected increase in sales. Most agreed with the opinion expressed by one agent that \"prices might begin to stabilize in 2010.\"\nNonresidential real estate firms indicated that leasing, purchase, and construction activity continued to decline as 2009 came to a close. They also reported that vacancy rates remained on the rise. Contacts said that building owners have been reducing rents as leases come due for renewals, and tenants have been generally renewing leases for less space and shorter terms. One contact said that \"slower general business activity has resulted in many properties not generating cash flow. They are not worth the same amount of money they were worth a few years ago.\" According to this contact, recent and prospective declines in commercial property values have induced many property owners to withhold them from the market and have deterred many buyers from making purchases. Contacts expect nonresidential real estate markets to remain weak through most of 2010.\nPrices\nReports on input costs and output prices have been mixed since the last Beige Book. The number of manufacturing firms noting increases for the commodities they use has risen, but most continued to report that they have not raised the prices of the products they make. Retailers have generally kept their selling prices steady, although discounts became more common toward the end of the holiday shopping period. Business firms in all sectors expect increases in energy costs and some commodity prices during 2010.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Chicago

/beige-book-reports/2010/2010-01-ch

"Beige Book Report: Chicago\nJanuary 13, 2010\nEconomic activity in the Seventh District increased in December. Contacts expected activity to continue to rise into 2010, although the pace of recovery was likely to be moderate. Consumer spending increased, while business spending was little changed. Manufacturing improved, but construction remained weak. Commercial real estate conditions deteriorated, but residential real estate activity continued to pick up. Credit conditions improved marginally. Price pressures increased for raw materials, while wage pressures were minimal. Prices for soybeans, wheat, milk, and hogs moved higher, while corn and cattle prices moved lower.\nConsumer Spending\nConsumer spending increased in December. The holiday shopping season was better than a year ago, particularly for sales of clothing, toys, gift cards and entertainment items. Customers remained price sensitive, and there were considerably more specials and promotions this year as retailers were willing to accept lower margins to attract consumers. Inventories declined from their already low levels, and contacts indicated that some stores were starting to run out of items in high demand. Sales of consumer durables and luxury items remained weaker, but contacts also reported greater optimism that demand was building for big-ticket items like household appliances. Early in December, auto sales were at the same pace as the previous reporting period, but then picked up later in the month. Contacts noted that GM dealer incentives put in place to clear discontinued inventory by year-end boosted sales of Pontiacs and Saturns.\nBusiness Spending\nBusiness spending was little changed from the previous reporting period. Most contacts expected to maintain their current level of capital expenditures in 2010, noting that sales and capacity utilization had yet to improve enough to justify higher expenditures on plant and equipment. Furthermore, a manufacturing contact noted that equipment capacity was not a problem in his industry; but with the deep cuts to the labor force over the past year, workers would be the greater need to meet projected growth. Current labor market conditions continued to be weak, although the volume of large layoffs declined and some permanent hiring was reported. Several contacts noted an increase in the demand for temporary workers. In addition, a large staffing firm reported that billable hours increased, particularly from the manufacturing sector and larger businesses. In contrast, permanent hiring continued to be low. A recruitment firm indicated that the transition from temporary to permanent hiring will likely take longer than following recent downturns as employers are remaining particularly conservative in their hiring plans coming out of this recession.\nConstruction and Real estate\nConstruction activity remained weak in December. Residential development picked up slightly for single-family homes, but remained at a low level for condominiums and townhomes. Contacts indicated that builders were being cautious, working off existing undeveloped lots and planning to maintain low levels of spec homes. In contrast, sales continued to increase. The extension and expansion of the federal homebuyer tax credit contributed to higher sales, although a contact noted that it was having a smaller impact than expected on the single-family market. In the multifamily market, many sales were driven by steep price discounts. Demand continued to be weak for nonresidential construction, although a contact indicated that interest had increased from his manufacturing, particularly automotive-related, customers. Commercial real estate conditions deteriorated further. Vacancy rates and subleasing activity increased putting additional downward pressure on rents.\nManufacturing\nManufacturing activity improved in December. Manufacturers with ties to the auto industry noted further improvement in demand. In addition, exporters, particularly those to Asia, continued to do well. In general, contacts noted that order books were filling up for the first quarter of 2010, and many expected to see a further uptick in production in the coming months. While overall activity remained low, pending changes to EPA emissions standards continued to benefit manufacturers of medium and heavy-duty trucks and parts; although this was seen as quickly waning going into 2010. Contacts generally expected that the gradual improvement in activity since last summer would continue into 2010. For instance, a contact noted that his business was likely to benefit from the fact that several large customers had freed up funds for capital expenditures put on hold in 2009. However, some contacts expressed doubt as to whether the current pace of recovery was sustainable. For example, a contact indicated that his customers were unlikely to increase their orders until their own sales had improved for a considerable period.\nBanking and Finance\nCredit conditions improved marginally in December. Credit spreads narrowed; and even with longer-term yields increasing, net corporate funding costs for a number of District firms declined. Banking contacts reported little change in business loan demand with continued low utilization of credit lines and most C&I lending going to refinance or pay off existing debt. Contacts did, however, indicate an uptick in financing for mergers and acquisitions as well as investment in distressed real estate. In contrast, small businesses continued to report difficulty in obtaining bank credit. Declines in asset quality showed further signs of leveling off and, outside of commercial real estate, were expected to improve in 2010. Consumer loan demand increased slightly, with credit card receivables ticking up and low mortgage rates continuing to stimulate mortgage lending. Charge-off and delinquency rates were reported to be better than expected, and several contacts expected to see further improvement in 2010.\nPrices and Costs\nPrice pressures increased for raw materials in December. Contacts indicated that lead times were rising as supplier capacity had yet to be fully brought back on-line while foreign and domestic demand continued to improve. Many expected a further round of commodity price increases to ensue in the first quarter of 2010. Recent tax increases were also indicated to be putting pressure on wholesale prices of items like cigarettes and soft drinks. However, pass-through of cost pressures to downstream prices was small on balance, as contacts indicated pricing power remained limited in many industries. Wage pressures were minimal, although union wage increases were noted by some construction contacts as putting additional pressure on costs.\nAgriculture\nSome farmers still had corn in the field when snows blanketed the ground in December. The weather also prevented much of the normal fall tillage and fertilizer application. Still, corn and soybean yields were above average throughout the District. Furthermore, storage of the crop has not been a problem, since end users, especially ethanol plants, kept buying grain as it was harvested. Even with increased drying costs, corn prices were high enough for returns to approach breakeven; and with soybean prices moving higher, most farmers should more than cover their costs for soybeans. Wheat, milk, and hog prices also increased, whereas corn and cattle prices decreased from the previous reporting period. The reduced number of dairy cows helped boost milk prices. Some small dairy operations or those that raise their own feed were able to avoid further losses. Smaller dairy producers continued to benefit from government payments that larger producers had tapped out. Hog farms also drew closer to breakeven, but cattle operators faced pressures made worse by very cold temperatures which required the consumption of extra feed.\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/2010/2010-01-ny

"Beige Book Report: New York\nJanuary 13, 2010\nThe Second District's economy has shown further signs of improvement since the last report, with indications of a modest pickup in the labor market; prices remain relatively stable. Business contacts, in general, report some expansion in activity, with manufacturing contacts also indicating that they are adding workers. Retailers mostly report that holiday-season sales were roughly on par with 2008 levels but ahead of plan; inventories were characterized as much leaner going into the season than last year, leading to less discounting than in 2008 in most cases. Auto dealers report mixed sales results for November and December, but they express a general sense of optimism about the outlook for 2010. Tourism activity in New York City showed some signs of tapering off towards the end of the year. Commercial real estate markets were steady to softer in the fourth quarter, with the sales/investment market remaining moribund. Residential real estate markets showed signs of stabilizing. Finally, bankers report steady demand for home mortgage loans but further weakening in loan demand in other categories; they also note ongoing increases in delinquency rates in all categories.\nConsumer Spending\nRetailers generally report that holiday-season sales were little changed from 2008 levels but moderately ahead of plan, as many stores carried significantly lower inventories than last year. Two major chains indicate that their sales were modestly above plan in December, led by sales of winter apparel; one contact noted that cosmetics and fragrances sold particularly well, while another noted that fine jewelry was one of the weaker categories. Contacts at these chains report less discounting and fewer clearance sales--both before and after Christmas--than in 2008. Separately, a survey of small retailers across New York State also indicates that sales were generally on or a bit ahead of plan in December, led by sales of cold-weather apparel; most of these retailers noted that they held lean inventories. Contacts at two major malls in upstate New York describe sales as relatively strong and ahead of plan--buoyed, in part, by brisk demand from Canadian shoppers--though there was a strong preference for lower-priced merchandise, and discounting was reported to be steep. At these malls, stores that were reluctant to discount generally showed poor results; electronics retailers reportedly fared particularly well.\nAuto dealers indicate mixed results: contacts in the Rochester area report that sales continued to improve in November and early December and were running ahead of comparable 2008 levels. In contrast, dealers in the Buffalo area describe sales as sluggish, continuing to run roughly 20 percent lower than a year earlier. Still auto dealers across western New York say they are optimistic about sales prospects for 2010; they maintain that credit availability for consumers has improved, but that the dealers themselves continue to face tight \"floor-plan\" credit--a revolving credit line that a dealership uses to purchase vehicles.\nTourism activity in New York City has been steady to weaker since the last report. Manhattan hotels report that occupancy rates were steady at fairly high levels in November and the first half of December and remained slightly above comparable 2008 levels; room rates were still down roughly 15 percent from a year earlier but appear to have leveled off since mid-year, when year-over-year drops hovered around 30 percent. Broadway theaters report that attendance was notably sluggish during this past holiday season: the seasonal pickup was much weaker than usual, and December attendance fell below year-earlier levels, though revenues were up modestly, reflecting higher ticket prices in 2009 than in 2008. Finally, the Conference Board reports that consumer confidence among residents of the Middle Atlantic states (NY, NJ, Pa), declined modestly in December.\nConstruction and Real Estate\nCommercial real estate markets in the District were mixed but, on balance, softer since the last report. Manhattan's office vacancy rate leveled off in the final quarter of 2009, but asking rents on Class A properties reportedly tumbled by 15 percent and were down 26 percent from a year earlier. Office markets surrounding New York City were mixed: asking rents declined moderately, while vacancy rates were little changed overall--up slightly in Westchester and Fairfield Counties but down slightly in northern New Jersey and Long Island. Office markets in upstate New York were generally stable, on balance, with faint signs of improvement in the Buffalo and Albany areas but modest softening in metropolitan Rochester. Sales transactions of office properties were exceptionally low throughout the District in the fourth quarter, and, in most cases, down from both the third quarter and a year earlier.\nHousing markets have been mixed but, on balance, steady since the last report. Home sales reportedly slowed considerably in the Buffalo area in November and early December, though prices remained higher than a year ago; this slowing is partly attributed to the expiration of the [now extended] homebuyer tax credit. Contacts in northern New Jersey report that resale activity and prices have picked up modestly, though both remain at fairly depressed levels; the uptick in prices may be partly due to fewer distress sales. New home construction in northern New Jersey remains stable at an exceptionally low level, with a modest pickup in multi-family development offsetting further weakening in the single-family sector. New York City's housing market has shown some signs of stabilizing. Co-op and condo prices continued to decline in the fourth quarter but at a more moderate pace than earlier in the year--in both Manhattan and the outer boroughs. Moreover, the number of transactions picked up, both from the third quarter and from a year earlier, and the inventory of unsold units, though still fairly high, fell 25 percent from late-2008 levels. Manhattan's apartment rental market also showed signs of stabilizing in December, as both rents and inventories were virtually unchanged from November. Still, rents remain well below year-earlier levels, especially when landlord concessions (fee waivers and free rent for 1-2 months) are factored in, though some of the more aggressive incentives are reportedly being scaled back.\nOther Business Activity\nA major New York City employment agency, specializing in office jobs, reports that hiring activity has picked up a bit--primarily from the city's financial industry--during what is usually a slow season. More generally, contacts at manufacturing firms report some ramping up in employment, whereas contacts in other sectors continue to report steady to declining employment at their firms; however, both manufacturers and other firms plan to increase employment levels in the first half of 2010. Retailers generally report that they tended to boost holiday-season staffing levels by giving existing workers longer shifts to a greater extent than last year, as opposed to hiring and training temporary seasonal workers; this also suggests somewhat fewer impending post-holiday layoffs than a year ago.\nLooking at overall business conditions, both manufacturing and non-manufacturing contacts report a pickup in activity; manufacturers remain broadly optimistic, while non-manufacturers now express a less negative view of the current business climate and are considerably more optimistic about the general outlook than they have been in well over a year. Contacts report little change in their selling prices, on balance, though a growing proportion indicate some pickup in price pressures and expect input prices to rise in the months ahead.\nFinancial Developments\nSecond District banks report that demand continued to decrease for all types of loans except residential mortgages, where demand is reported to be steady. Bankers also report decreased demand for refinancing. For all loan categories, respondents continue to indicate tightening of credit standards. Contacts note an increase in the spreads of loan rates over costs of funds for all loan categories except residential mortgages, where they report no change. Respondents also indicate further decreases in average deposit rates. Finally, respondents report ongoing increases in delinquency rates across all loan categories.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"