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St Louis

/beige-book-reports/2015/2015-10-sl

"Beige Book Report: St Louis\nOctober 14, 2015\nEconomic activity in the Eighth District increased at a modest pace since our previous report. Despite steady employment growth, contacts across many industries reported difficulties finding workers. Retailers and auto dealers continued to report higher sales. Banks continued to report strong growth in loans, although loan growth has slowed from our previous report. Real estate conditions continued to improve at a steady pace as home sales and permits increased in most areas. Poor crop conditions and falling prices are putting downward pressure on farm incomes.\nEmployment, Wages, and Prices\nDistrict employment grew at a modest pace since our previous report. Firms that provide warehousing and distribution services, information technology services, and health care and social assistance services reported plans to hire new employees. Contacts across many industries reported increased hiring difficultly. Reports from the manufacturing sector were mixed. Manufacturing contacts in rural areas throughout the District continue to report difficulty finding and retaining qualified employees. In particular, contacts in the rapidly growing furniture manufacturing sector in northern Mississippi have struggled to find enough employees with cutting and sewing skills. Contacts in trucking and other modes of transportation continue to report a shortage of qualified operators and technicians.\nContacts reported that lower fuel prices have led to lower fuel surcharges, and prices for agriculture-related consumer goods are falling in response to the crop price declines. Wages in the District grew at a modest pace, with contacts reporting wage and salary adjustments around 2 percent. One contact noted workers are changing jobs as a means of obtaining higher pay.\nConsumer Spending\nAnecdotal evidence from local contacts indicates that the retail sector experienced modest growth since the previous report. The majority of contacts indicated that sales met or exceeded expectations. However, some retailers noted a slight slowdown in activity during the final weeks of summer. Retail activity continues to pick up in southern Indiana, as firms have announced plans of new retail development and the expansion of existing retail centers.\nReports from auto dealers were mixed. Multiple contacts reported increased foot traffic and sales in recent weeks compared with the previous quarter. Several others noted that sales, services, and repairs have recently decreased but expect activity to pick up for the remainder of the year. Contacts continued to indicate a shift in demand toward trucks and SUVs and away from cars as the result of low gas prices.\nManufacturing and Other Business Activity\nManufacturing activity has improved at a modest pace since our last report. Several companies in the District, including firms that manufacture appliances, transportation equipment, primary metals, and plastics and rubber products, reported increased capital expenditures and facility expansion plans.\nReports in the District's service sector have been generally positive since the previous report. Several universities, hospitals, and senior care facilities reported plans to build new facilities or upgrade existing ones. Transportation industry contacts reported a mixed outlook. Several contacts have noted a sharp slowdown in shipments of materials related to the energy sector but are continuing capital expenditures as previously planned.\nReal Estate and Construction\nResidential real estate activity continued to expand, but at a slower pace than in the previous report. That said, contacts expect a steady improvement through year-end. Compared with the same period in 2014, August home sales increased on a year-over-year basis: 2 percent in Little Rock, 1 percent in Louisville, 7 percent in Memphis, and 2 percent in St. Louis. Residential construction increased in the majority of the District's metro areas on a year-over-year basis. Compared with the same period in 2014, August single-family building permits increased 6 percent in Little Rock, 8 percent in Memphis, and 20 percent in St. Louis and decreased 2 percent in Louisville. Contacts expect further increases in home construction to catch up with the current high-demand and low-inventory situation.\nCommercial real estate market conditions were positive throughout the District. Contacts reported high demand in the apartment, office, and industrial real estate markets. Many retailers are shifting toward downsizing but are willing to pay higher rents for smaller locations. Commercial construction activity continued to be positive throughout most sectors. Construction activity was particularly high in the healthcare sector, with expansions of medical office campuses.\nBanking and Finance\nOverall banking conditions remain strong in the District. Loan growth slowed somewhat relative to prior quarters but remains in positive territory and above the national growth rate. Total loans outstanding at a sample of about 80 small and mid-sized District banks increased 10 percent in September from the same time last year. Real estate lending increased 9 percent over the reference period. Commercial and industrial loans increased 10 percent over the period, and loans to individuals increased 7 percent. Lending growth in each of these categories was slower in September than in the earlier this year, but growth rates remain above historical levels.\nAgriculture and Natural Resources\nContacts expect District row crop yields to be about 10 percent below 2014 levels as the result of extensive rainfall. Many contacts believe that crops with earlier planting seasons, such as corn, will experience a yield decline of up to 30 percent in the most rain-ridden areas. Contacts noted that with the recent decline in crop prices and stickiness of some input prices, production levels will not be high enough to prevent a decline in net farm income. While most livestock-related prices are also trending downward, the recent bird flu outbreak has had a mixed impact on poultry prices. District coal production has continued to fall, with August production 4.7 percent below the August 2014 level. Year-to-date coal production is currently 5.1 percent below last year's level.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Atlanta

/beige-book-reports/2015/2015-10-at

"Beige Book Report: Atlanta\nOctober 14, 2015\nSixth District business contacts described economic conditions as improving at a modest pace from mid-August through September. The outlook among firms remains largely optimistic with the majority of contacts expecting growth to be sustained at or slightly above current levels for the remainder of the year.\nSome retailers cited an improvement in sales growth, while others reported slower or no growth compared with a year ago. Automobile dealers continued to note strong sales. Hospitality contacts reported strong activity. Residential real estate contacts indicated that existing and new home sales and prices were slightly ahead of last year's levels. Commercial real estate contacts continued to note improving demand and construction activity was up from a year ago. Manufacturers indicated that overall activity slowed with new orders and production decreasing since the previous report. Banking contacts noted lending activity was mixed. Payrolls expanded slowly, and businesses continued to report challenges filling positions. Contacts indicated wages continued to grow at a slow, steady pace and input cost pressures were almost nonexistent.\nConsumer Spending and Tourism\nDistrict retailers reported mixed activity from mid-August through September. Most contacts reported healthier sales growth compared with a year ago while others reported slow or no growth. Industry contacts expect activity to improve from current levels for the upcoming holiday season. Auto sales continued to experience robust sales activity.\nReports on leisure and business travel remained positive. Tourism contacts in Georgia, Florida, and Louisiana reported a solid summer season with occupancy numbers and attendance at major conventions up from a year ago. Year-to-date Mississippi casino gaming revenues increased compared with the same period last year. Industry contacts expect business and leisure travel to exceed forecasts for the remainder of 2015 and many already report strong advanced bookings in the hotel and conference segments for the first quarter of 2016.\nReal Estate and Construction\nDistrict contacts indicated that residential real estate and construction activity continued to improve since the last report. The majority of homebuilders indicated that construction activity was up from the year-ago level and had met or exceeded their plan for the period. Most builders and brokers reported home sales were flat to up slightly and buyer traffic increased relative to one-year earlier. Three-fourths of builders noted that inventory levels were on par with last year; broker reports on inventory levels were mixed. Most real estate contacts indicated that they were experiencing modest home price appreciation in their markets. Business contacts' expectations for home sales and construction activity over the next three months remain positive, with the majority indicating that they expect activity to pick up slightly.\nCommercial real estate brokers indicated improvements in demand that resulted in increased absorption and rent growth across property types, but they continued to caution that the rate of improvement varied by metropolitan area, submarket, and property type. Most commercial contractors indicated that nonresidential construction activity was up from one year ago, with many also reporting a backlog greater than the previous year. Reports on apartment construction suggested that activity remained robust. The outlook among District commercial real estate contacts remains positive, with most expecting the pace of construction activity to increase slightly over the next quarter.\nManufacturing and Transportation\nDistrict manufacturers indicated that business activity declined since the previous report. Contacts noted a decrease in new orders and production, while employment levels at District manufacturing firms were relatively unchanged. Finished inventory levels were reported to be slightly lower than the previous report. However, reports indicated that commodity input costs continued to decline. Optimism for future production fell, with less than one-quarter of businesses expecting higher production over the next three to six months.\nTransportation contacts cited mixed levels of activity from mid-August through September. Trucking companies reported healthy demand, which was mostly attributed to growth in e-commerce; meanwhile, flatbed volume, primarily steel shipments, showed some slowing in growth. District rail contacts indicated that total carload volume declined slightly due to year-over-year, double-digit decreases in shipments of coal, iron and steel scrap, and metals. District port contacts reported strong demand across all types of cargo.\nBanking and Finance\nReports indicated that credit remained readily available for qualified borrowers. Competition for new commercial loan customers remained tight and some financial institutions were reported to be extending term amounts and maturities to attract customers. Small businesses indicated continued difficulty in obtaining financing and noted funding some expansion with cash. As mortgage refinancing activity slowed, purchase transactions made up a greater share of mortgage loans. Consumer lending activity was strong and bad debt on the consumer side was significantly reduced.\nEmployment and Prices\nMany District companies continued to report adding to headcounts, albeit modestly. Hiring challenges persisted and intensified in some areas. Contacts also reported that labor market tightness was prompting some firms to implement training programs and referral or signing bonuses to address labor shortages. Contacts indicated that hiring and retention challenges were most prevalent among higher skilled occupations though firms also noted greater competition for lower skilled labor.\nBusinesses continued to report negligible non-labor input cost pressures, although lower commodity prices and lower costs for imported goods aided in improving margins, and firms were generally able to hold prices steady. Wage growth remained in the 2 to 3 percent range for most job categories, with the exception of specialized positions in high demand, which continued to receive outsized increases. According to the Atlanta Fed's survey of business inflation expectations, year-over-year unit costs were up 1.3 percent in August, the lowest reading in two years. Survey respondents also indicated that they expect unit costs to rise 1.7 percent over the next 12 months.\nNatural Resources and Agriculture\nContinued weak global demand and an oversupply of oil drove exploration and production companies to further reduce capital investment and business activities that do not improve cash-flow. That said, contacts reported that liquid natural gas projects already in progress will continue on schedule. Refineries have been running near capacity with feedstock readily available at low costs. Deepwater drilling activity showed signs of slowing with a drop in rig counts. Utility contacts reported increased energy usage in both the residential and commercial sectors.\nAreas affected by drought conditions expanded in the District since the last report. Most drought-affected areas were categorized as abnormally dry to severe, and parts of Mississippi experienced extreme drought conditions. Mississippi's rice harvest was well underway although slightly behind its five-year average, while in Louisiana, the harvest was almost completed and on par with its five-year average. Both Louisiana and Mississippi's soybean harvests were well underway and ahead of its five-year average. Cotton and peanut harvesting were in the early stages throughout the District.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

San Francisco

/beige-book-reports/2015/2015-10-sf

"Beige Book Report: San Francisco\nOctober 14, 2015\nEconomic activity in the District grew at a moderate pace during the reporting period of late August through early October. Overall price inflation appeared to firm slightly, and upward wage pressures increased further. Retail sales grew moderately, while demand for business and consumer services picked up further. Manufacturing output was largely unchanged overall. Agricultural activity edged up. Conditions in residential and commercial real estate markets expanded further. Lending activity ticked up.\nPrices and Wages\nOverall price inflation appeared to pick up slightly on balance. Prices for health-care services edged up, while pharmaceutical prices continued their rapid ascent. Housing costs have been rising significantly in some urban markets due to growing demand combined with tight availability. Contacts in the restaurant industry reported price increases, particularly for catering services. By contrast, retail grocery prices remained flat, with vigorous industry competition preventing retailers from passing on cost increases to final prices. Lower natural gas prices reduced electricity costs. Ongoing price declines were noted for technology products and services and industrial commodities such as steel, due in part to low import prices arising from past dollar appreciation. High yields held down prices for selected agricultural products.\nUpward wage pressures grew moderately across the District. The impact of higher minimum wages implemented over the past year began to filter through to the retail sales sector and increased wages for lower-skilled workers in some areas. Wage pressures grew in the health-care sector, particularly for specialized positions such as nurses and software developers. Shortages of skilled labor contributed to further wage increases in both the technology and construction sectors. Wages in the financial sector remained flat. Some contacts reported that, while wage pressures had not yet materialized in many industries, the number of job applicants for new positions fell, and difficulties finding workers with appropriate skills is a primary concern.\nRetail Trade and Services\nRetail sales grew at a moderate pace over the reporting period. Contacts reported that sales were bolstered in part by rising tourist activity in some areas. Sales of mobile computing devices were strong, spurred by rising consumer demand for wearable computing items. Sales in the grocery sector remained flat, and low-cost retailers gained market share as consumers remained price conscious. Apparel sales fell slightly.\nDemand for business and consumer services expanded further. Activity in the technology services sector expanded, particularly for cloud-based remote services. Infrastructure investment in data centers continued to build in anticipation of future adoption of public cloud services. Activity in the hospitality sector expanded further, and hotel occupancy rates remained high. Demand for health-care services was largely steady despite rising rates of insurance coverage in some parts of the District.\nManufacturing\nManufacturing activity was mixed but appeared flat on balance. Domestic output in the steel industry remained weak, as earlier dollar appreciation increased import competition, especially from China. Semiconductor sales slowed slightly. By contrast, demand for biotech products and pharmaceuticals has been expanding briskly, fueling high levels of capital spending and robust mergers and acquisitions activity. Orders of new aircraft dropped, but the elevated level of existing orders kept deliveries above their level from the same period last year. Contacts in the defense industry reported that federal sequestration continued to be a drag on new orders, prompting some firms to emphasize cost reduction and efficiency measures to maintain profitability. Uncertainty over the federal budget has put a crimp on defense industry planning over the near to medium term.\nAgriculture and Resource-Related Industries\nAgricultural activity expanded slightly during the reporting period. Contacts noted that the grain yield this year was excellent, although ample supply held down profits for individual growers. Higher-than-normal temperatures increased potato yields but reduced crop quality somewhat. A few contacts expressed concerns that the strong dollar has been restraining agricultural exports, and producers have not yet adjusted crop plans to account for slower demand growth from China. Extensive forest fires slowed logging activity, but contacts anticipate a return to normal production levels when expected fall precipitation helps bring wildfires under control.\nReal Estate and Construction\nReal estate activity picked up further. Contacts reported continued strong growth in residential housing construction throughout the District. Construction of new multifamily units continues to outpace construction of single-family units, and sales of existing homes remained strong. Labor conditions remain tight, and contacts reported having trouble scheduling contractors and completing construction projects on time and on budget. However, a contact in Salt Lake City mentioned that employment in the construction sector has not yet returned to its pre-recession level in that region. Permits for new residential projects grew modestly, although shortages of available land continued to constrain new construction somewhat. Contacts in the Bay Area and Los Angeles reported that prices for lower-end units grew faster than prices of luxury units, and they emphasized that affordability will remain a concern for the foreseeable future.\nFinancial Institutions\nLending activity grew modestly over the reporting period. Overall lending activity edged up, with funds remaining in ample supply relative to borrower demand. Deposits expanded further, particularly for short-term accounts, and banks reported difficulties converting short-term deposits into longer-term assets. Most contacts reported continued weakness in net margins and slow growth in profitability stemming from current low rates and uncertainty about future interest rate movements. Tight lending conditions in the residential market persist as banks remain wary of speculative projects. However, lending for commercial projects grew moderately over the reporting period. Capital levels remained relatively high, particularly for community banks. One contact mentioned that initial public offerings for technology companies had cooled due to international economic uncertainty, but mergers and acquisitions activity remained strong.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Richmond

/beige-book-reports/2015/2015-10-ri

"Beige Book Report: Richmond\nOctober 14, 2015\nInformation gathered since the last Beige Book indicates that Fifth District economic growth moderated in recent weeks. Manufacturing activity was tepid, with mild growth in shipments and the volume of new orders. Retail sales growth slowed and activity at non-retail services firms varied. Consumer loan demand leveled off, while demand for commercial loans rose modestly. Real estate activity, both residential and commercial, grew at a moderate pace. Agribusiness revenue growth was modest and recent severe flooding damaged some crops. The demand for labor increased moderately. According to our most recent surveys, manufacturing employment rose slightly. In contrast, hiring slowed at non-retail service firms and declined at retail establishments. Average wage growth softened in the service sector, while manufacturing wages rose moderately and the average workweek shortened. Price increases slowed.\nManufacturing\nManufacturing reports were mixed since the last report. On balance, producers noted mild growth in shipments and the volume of new orders. Furniture manufacturers reported increased sales. A door manufacturer in North Carolina reported that demand was steady, but not strong. A manufacturer in North Carolina reported differing conditions across business segments. He stated that the textile business was very weak, except in non-wovens and crafts. Another textile manufacturer and a chemical producer said their firms' exports had weakened significantly in recent weeks. A Virginia food manufacturer reported steady, but overall unchanged business conditions. According to our most recent survey, prices of raw materials and prices of finished goods rose, although at a slower pace than during the previous report.\nPorts\nExports softened year-over-year in recent weeks and imports strengthened, which port authorities attributed to the strong dollar. Inbound loaded container traffic grew rapidly since our last report, and departing vessels filled unused export space by removing stored empty containers from the ports. Apparel and footwear, appliances, furniture, and resins were among the strongest containerized imports. European demand for exports of farm and construction equipment declined. Additionally, Chinese restrictions reduced some grain and soybean exports. Exports of forest products, chemicals, and used cars slowed since our last report, while exports and imports of new vehicles rose.\nRetail\nRetail sales grew at a slower pace since the previous Beige Book. Department store managers reported stronger sales while grocery sales flattened. Sales growth improved according to several car and truck dealerships, but slowed unexpectedly at a large dealership near Washington, D.C. Sellers of construction materials reported sales growth. Retail prices rose modestly since the last report, and one retailer noted that prices had fallen on some items in his spring order.\nServices\nActivity at non-retail services firms was mixed in recent weeks. An executive at a national trucking firm headquartered in the District reported that demand was a little softer because their customers' inventory levels were high, but he expects a seasonal pick-up to begin in the next few weeks. Architects, construction site preparation specialists, and other construction-related firms reported better revenue growth. Demand for healthcare services was unchanged, remaining at high levels according to hospital administrators. Healthcare organizations reported higher supplier prices for pharmacy items. Prices received by services providers rose more slowly since the previous report.\nTourism strengthened moderately in recent weeks. Hotels and restaurants in Virginia, West Virginia, and the Carolinas reported an increase in bookings since our last report. An executive on the outer banks of North Carolina reported that bookings were stronger year-over-year at hotels and rental properties, and that the outlook is for a busy Thanksgiving weekend. However, at a hotel located near a military base, an executive reported flat to slightly slower bookings as a result of fewer government stays. Room rates and rental rates were reported to be unchanged, except in Charleston and Greenville, South Carolina, where hotel rates rose.\nFinance\nLoan demand improved slightly, on balance, since our previous Beige Book. According to a lender in Virginia, residential mortgage demand slowed slightly over the last few weeks, but was on par with the same time period last year. A South Carolina banker characterized mortgage demand as slow but steady. However, commercial loan demand rose modestly. A lender in South Carolina reported an increase in demand for commercial and industrial real estate loans, particularly in the Charleston area. A North Carolina lender echoed that overall commercial real estate demand had risen, but added that increased competition from other banks made loan growth difficult to achieve. Several bankers in other areas also said that competition remained high, putting downward pressure on margins. Credit standards loosened slightly, according to contacts in Maryland, Virginia, and South Carolina. A Maryland lender added that the loosening also applied to land developers. Credit quality was reported as unchanged at strong levels in Virginia, North Carolina, and South Carolina. The Virginia banker noted that delinquency rates improved in the last few weeks. There were no reports of changes to interest rates since our last report.\nReal Estate\nResidential real estate activity grew at a moderate pace since the previous report. Average sale prices increased slowly, and new construction prices were reportedly rising faster than resale prices. Days on the market varied. Home inventories remained low. A source indicated that the residential real estate market in the Frederick County region of Maryland was generally strong, with steady buyer traffic and an increase since the previous report in transactions on homes below $400,000. A Richmond real estate agent said that buyer traffic was very good, although inventory remains low for the market overall. A broker in northern Virginia reported increased demand in higher-end homes, along with higher closing prices. Single-family construction increased modestly since the previous report, with multiple reports of a slight uptick in speculative building. A contact in the Hendersonville, North Carolina area stated that custom home building is booming, particularly for high-end homes. Multifamily leasing and construction activity remained strong.\nCommercial real estate activity increased moderately since the previous report. Rental rates rose slightly, while vacancy rates varied by submarket and region. A Realtor in Richmond, Virginia reported strong demand across all segments. A broker in Raleigh, North Carolina stated that office space is doing very well, with new businesses coming into the area. Office space tightened in Charlotte and speculative office construction rose. Short-term leasing of warehouse space spiked in the area of Columbia, South Carolina following record flooding there, with much of the space going to emergency assistance organizations that were bringing in supplies. A Realtor in Columbia, South Carolina described strong commercial development, particularly apartment construction. Another South Carolina agent reported solid retail, industrial, and office markets. He said rental rates increased in the office sector and flattened in the industrial sector. A real estate contact in Washington, D.C. reported \"an explosion\" of new restaurants and grocery stores. In contrast, Baltimore activity was reported to be flat. Commercial construction increased in Richmond, Charlotte, and Columbia, South Carolina, and was unchanged in other locations, according to sources.\nAgriculture and Natural Resources\nAgribusiness reported modest revenue growth in recent weeks. Corn harvesting was completed. However, farmers reported that dry conditions earlier in the season had result in low, and in some cases zero, corn crop yields. Cotton and peanut harvesting is underway. In early October, extended rainfall in South Carolina resulted in severe flooding in some areas. One peanut farmer said he expects much of his crop to be affected by mold as result of the flooding, and a sod farmer reported that he will have to replant a recently sown crop. Cotton prices were reported as decreasing since the last report. Farmers' input prices were unchanged.\nNatural gas production was flat overall since our previous report. Appalachian coal production remained stable in in the north, but continued to decline in the south. Coal prices were unchanged.\nLabor\nSince the last Beige Book, the demand for labor has increased moderately, especially for customer service workers, skilled tradespeople, technicians, healthcare practitioners, government employees, engineers, IT professionals, truck drivers, and manufacturing workers. However a couple of executives at healthcare systems said they were only filling vacated positions and were managing for productivity improvement with existing staffing. A few staffing services agents noted more direct hiring. A contact in South Carolina said that temp to perm hiring picked up, and employees were being converted at a quicker pace. Difficulties finding qualified workers remained a challenge districtwide, and some employers were willing to hire workers who lacked the requisite skills, but had a strong work ethic and were capable of learning. A Virginia staffing agent described conditions as \u2018a candidate's market' for qualified job-seekers. Reports on wages were varied. Wage pressures increased for workers in high demand, such as drivers, housekeepers, food servers, manufacturers, and construction workers. According to our most recent surveys, employment increased mildly in manufacturing, slowed at non-retail service firms, and declined at retail establishments. Wage increases slowed in the service sector, while manufacturing wages rose moderately and the average workweek shortened.\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/2015/2015-10-su

"Beige Book: National Summary\nOctober 14, 2015\nPrepared at the Federal Reserve Bank of New York and based on information collected on or before October 5, 2015. 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 point to continued modest expansion in economic activity during the reporting period from mid-August through early October. The pace of growth was characterized as modest in the New York, Philadelphia, Cleveland, Atlanta, Chicago, and St. Louis Districts, while the Minneapolis, Dallas, and San Francisco Districts described growth as moderate. Boston and Richmond reported that activity increased. Kansas City, on the other hand, noted a slight decline in economic activity. Compared with the previous report, the pace of growth is said to have slowed in the Richmond and Chicago Districts. A number of Districts cite the strong dollar as restraining manufacturing activity as well as tourism spending. Business contacts across the nation were generally optimistic about the near-term outlook.\nConsumer spending grew moderately in the latest reporting period. Most Districts reported that non-auto sales grew at a modest or moderate rate, while vehicle sales generally grew more strongly; tourism across the nation was mixed. Nonfinancial services activity generally strengthened since the previous report, although freight transport activity weakened.\nManufacturing turned in a mixed but generally weaker performance during the latest reporting period, with a number of Districts noting adverse effects from the energy sector. Some strength was reported in the motor vehicles, aerospace, and transportation equipment industries, while metals industries were generally weaker--in part, due to the strong dollar.\nBoth the housing and commercial real estate markets improved since the last report. Home prices and sales volume increased in almost all regions, and a number of Districts noted relative strength in the market for lower or moderately priced homes. Both residential rental markets and commercial real estate markets were mostly stronger. Commercial and residential multi-family construction showed further strength; single-family construction activity was more mixed but did increase modestly.\nReports on the banking and finance sector were generally positive--lending activity increased, loan quality was steady to improved, and lending standards were little changed or somewhat easier.\nAgricultural conditions were mixed. Growing conditions and farm output were solid in some Districts, but there were adverse effects from droughts in the south, as well as excessive rainfall in the Richmond and St. Louis Districts. Lower crop and livestock prices raised concerns that farm income may weaken. Activity in the energy industry weakened since the last report.\nLabor markets tightened in most Districts, with some reports of labor shortages--particularly for skilled workers. Wage growth was mostly subdued, though there were scattered reports of increased wage pressures. Prices remained fairly stable across the nation, as most Districts reported that prices of both inputs and finished goods were little changed or up only slightly, though some Districts report declines for energy, as well as other inputs.\nConsumer Spending and Tourism\nConsumer spending grew at a moderate pace over the latest reporting period. Most Districts indicated that non-auto retail sales expanded at a modest or moderate rate. New York and Atlanta characterized sales as mixed, while Richmond and Chicago noted that growth slowed; Kansas City, however, indicated that sales weakened slightly. Contacts were described as generally optimistic about the sales outlook in the Boston, Philadelphia, Atlanta, Kansas City, and Dallas Districts.\nVehicle sales generally increased in the latest reporting period. Richmond, Atlanta, Chicago, and Dallas characterized auto sales as strengthening; New York said they were steady to stronger; and St. Louis and Minneapolis described them as mixed. Modest growth in vehicle sales was reported in the Philadelphia, Cleveland, and Kansas City Districts.\nTourism was mixed across the nation. Minneapolis and San Francisco indicated increased activity, and Philadelphia, Atlanta, and Chicago reported that tourism was at high or strong levels. In contrast, tourism was seen to have weakened in the New York, Kansas City, and Dallas Districts. The strong dollar was mentioned as a restraining factor by New York, Minneapolis, and Dallas.\nNonfinancial Services\nNonfinancial services activity generally strengthened since the previous report. The New York, Philadelphia, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco Districts reported that service-sector activity expanded, on balance, while such activity was reported to be mixed in the Richmond District. Revenues increased for advertising and business services firms in the Boston District, while Dallas reported particularly strong demand for logistics and accounting services and little evidence of negative effects on professional services from lower energy prices. Activity in the technology services sector expanded in the San Francisco District, particularly for cloud-based remote services.\nOn balance, goods transportation services softened since the previous report. Some declines in shipments and cargo volumes were noted in the Cleveland, Atlanta, St. Louis, Kansas City, and Dallas Districts, particularly metals and energy-related shipments. Partially offsetting these declines, motor vehicle shipments were said to have increased in the Cleveland and Dallas Districts. In addition, port contacts in the Richmond District noted that exports softened and imports strengthened due to the strong dollar, while port contacts in the Atlanta District reported strong demand across all cargo types. Sturdy demand for trucking services was noted in the Atlanta and Dallas Districts.\nManufacturing\nOn the whole, manufacturing conditions were generally sluggish. Reports were mixed across Districts, and among those that saw some increase in activity, such improvement was mild. Chicago and St. Louis reported modest growth in manufacturing activity, and Dallas reported that most manufacturers saw an increase in demand since the last report. On the other hand, Cleveland, Richmond, Boston, Minneapolis, and San Francisco all reported that manufacturing activity was flat or mixed, while the remaining four Districts--New York, Philadelphia, Atlanta, and Kansas City--noted that manufacturing activity had declined. Several Districts reported fairly strong growth in activity related to motor vehicles, aerospace, and transportation equipment. Cleveland, Chicago, and San Francisco all reported that the demand for steel remained weak, with the strong dollar and competition from China cited as factors driving this trend. Falling demand from the energy sector was also cited as a source of weakness by a number of Districts. Activity related to primary and fabricated metals was mixed, with Chicago and Kansas City seeing weakness in these sectors, while Philadelphia, St. Louis and Dallas saw some expansion in metals related industries. Demand for high tech manufacturing picked up slightly in the Dallas District, while semiconductor sales slowed in the San Francisco District.\nReal Estate and Construction\nResidential real estate activity has generally improved since the last report, with almost all Districts reporting rising prices and sales volume. One exception was the Chicago District, where prices and sales volume were generally steady. A number of Districts noted that the market for lower or moderately priced homes has outperformed the high end of the market. The inventory of available homes was reported to be low in the Boston, New York, Richmond, and St. Louis Districts; and San Francisco reported a shortage of available land in some areas. On the other hand, Philadelphia reported adequate inventories, and Dallas noted a fair amount of supply in the pipeline. Boston, New York, and Chicago indicated rising residential rents, while Minneapolis reported sharp declines in rents in energy-producing areas of North Dakota. Residential construction has been mixed but generally stronger in the latest reporting period, with multi-family outpacing single-family construction. Strong multi-family construction was highlighted in the New York, Cleveland, Richmond, and San Francisco Districts, while Atlanta reported strong residential construction generally. However, Minneapolis and Kansas City reported declines in new home construction. Philadelphia mentioned a lack of new construction, while Dallas reported that new construction has been restrained by labor shortages; Chicago indicated little change.\nCommercial real estate markets have shown signs of strengthening in all twelve Districts. Most Districts noted improvement across all major segments, though New York and St. Louis noted some increased slack in the market for retail space. Commercial construction was also stronger in most Districts. Boston and St. Louis noted brisk construction in the health sector, including senior care facilities, and Cleveland also indicated strong demand for senior living structures. New York, on the other hand, noted some pullback in new commercial construction, though activity remained fairly brisk.\nBanking and Financial Services\nReports from the banking sector were generally positive. Loan demand or volume was reported to be growing in the Philadelphia, Cleveland, Richmond, Chicago, St. Louis, Dallas, and San Francisco Districts. Other Districts indicated mixed loan demand: New York reported rising demand for commercial loans but declining demand for refinancing, and Kansas City indicated weaker demand for agricultural loans but steady demand in other categories.\nCredit conditions were mixed but mostly improved. Improved loan quality or declining delinquency rates were noted in New York, while Cleveland, Richmond, and Kansas City reported little change. Richmond and Chicago indicated some easing in lending standards, while New York, Kansas City, and Dallas reported no change. San Francisco reported tight lending conditions in the residential real estate segment.\nAgriculture and Natural Resources\nAgriculture conditions were mixed. Growing conditions and farm output were solid in some Districts, while either drought or excessive moisture hampered production in other Districts. Several Districts reported lower prices for crops and livestock, raising concerns that farm income may weaken as a result. Drought conditions were seen in parts of the Atlanta and Dallas Districts, and excessive rainfall was reported in the Richmond and St. Louis Districts. Corn and soybean crops were reported as being in excellent shape by Chicago, Minneapolis and Kansas City, and the San Francisco District reported that grain yield has been excellent.\nActivity in the energy industry declined further since the last report, particularly in the Minneapolis, Kansas City and Dallas Districts, where the number of active drilling rigs fell. Dallas said that the demand for oilfield services remained depressed, and exploration and production companies reduced business activities in the Atlanta District. Coal production fell in the St. Louis District and in parts of the Richmond District, and natural gas production was flat in the Richmond District.\nEmployment, Wages and Prices\nLabor markets generally tightened since the previous report. The New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, and Dallas Districts indicated that employment was up modestly to moderately. Boston reported that most advertising and consulting firms planned to increase hiring, while manufacturers were cutting staff. Many Districts continued to report that employers were having difficulty finding skilled workers, and, in some cases, unskilled workers. Scattered labor shortages were reported in construction (Cleveland, Chicago, San Francisco), trucking (New York, St. Louis, Kansas City), and information technology (New York, Kansas City, San Francisco). However, contacts in the Philadelphia District noted relatively more growth of part time and temporary positions compared to full-time positions, and Dallas reported that layoffs in the energy industry were still underway.\nWage growth remained subdued in most Districts since the previous report. The Boston, Philadelphia, Richmond, Atlanta, Chicago, St. Louis, Kansas City, and Dallas Districts noted only slight to modest wage increases. To the extent that more significant wage increases were observed, they were largely concentrated among highly skilled workers in information technology, health care, professional services, and some of the skilled trades. However, New York noted increased wage pressure for both skilled and less skilled workers, and San Francisco noted that the impact of higher minimum wages implemented over the past year began to filter through to the retail sector and resulted in increased wages for some lower-skilled workers.\nPrice pressures were said to be contained, as most Districts reported that both input and finished goods prices were little changed or up only slightly since the previous report. Contacts in the Kansas City District noted that prices grew more slowly than in recent months, and eased in some sectors. Moreover, low or declining prices for energy products, technology goods, some agricultural commodities, and metals were cited by some Districts.\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 14, 2015\nGrowth in economic activity in the Seventh District slowed to a more modest pace in late August and September, but most contacts expected growth to pick up somewhat over the next 6 to 12 months. Gains in business spending were moderate, but growth in consumer spending, manufacturing production, and construction and real estate was slower. Credit conditions were little changed. There was also little change in raw materials and retail prices, and limited wage and non-wage cost pressures. Corn and soybean crop conditions improved some as the harvest began, while the profitability of crop operations ranged from substantial losses to break-even.\nConsumer Spending\nGrowth in consumer spending slowed to a more modest pace over the reporting period. Retail sales were little changed overall, with contacts reporting higher sales of gift items and jewelry, flat food and beverage sales, and lower apparel, furniture, and appliance sales. Contacts in the tourism industry in Michigan reported strong summer traffic, with higher overall spending than last year. Both new and used light vehicle sales continued to be strong. Vehicle transaction prices continued to rise, though at a slower pace, as manufacturers increased incentives. Relatively low gasoline prices continued to cause a shift in sales toward light trucks.\nBusiness Spending\nGrowth in business spending remained moderate in late August and September. Most retailers indicated that inventories were at comfortable levels, while many manufacturers reported an undesirable increase in their inventory-to-sales ratio. Steel service center inventories remained especially elevated. Strong sales kept motor vehicle dealer inventories low, particularly for light trucks. The pace of current capital spending remained moderate, but many contacts reported a slowdown in planned capital outlays. Expenditures were primarily focused on replacing industrial and IT equipment, though spending on transportation equipment picked up. Spending for expansion was relatively limited, and a number of manufacturing contacts reported delaying major equipment purchases because they expect weaker demand in the future. The pace of hiring also remained moderate, but hiring plans slowed some. Labor demand continued to be strongest for skilled workers, particularly for many professional and technical occupations, sales, and skilled manufacturing and building trades. One contact indicated that the construction of a new facility took longer than expected and was over budget because of a shortage of skilled trade workers. A staffing firm again reported flat revenue growth.\nConstruction and Real Estate\nConstruction and real estate activity increased modestly, on balance, over the reporting period. Demand for residential construction was little changed. One contact noted a decrease in traffic and new contracts in suburban markets, but said that the value of homes has continued to increase for prime locations in the Chicagoland area. Residential rents increased modestly, while home sales, home prices, and home affordability were little changed. Most nonresidential construction contacts also reported little change in demand, though one contact reported moderate increases for retail and office spaces. Commercial real estate activity continued to increase moderately. Growth was widely distributed across the retail, industrial, and office segments, and contacts noted increasing demand for both for-sale and for-lease properties. Commercial rents picked up, while commercial vacancy rates and availability of sublease space decreased slightly. Contacts, however, noted that lenders appeared cautious, possibly in response to the increased volatility in the financial markets.\nManufacturing\nManufacturing production growth slowed to a more modest pace in late August and September. While the auto, heavy-duty truck, and aerospace industries continued to experience solid gains, most other industries saw limited growth. Demand for steel remained weak and capacity utilization fell to one of its lowest points for the year. Steel imports were down some, but still high. On balance, specialty metals manufacturers reported weaker demand: The only indications of strength came from suppliers of the auto and aerospace industries, while those primarily supplying the oil and gas industry reported especially weak orders. In addition, a number of specialty metals manufacturers indicated that their backlogs had declined unexpectedly over the reporting period. Weak demand for agriculture and mining machinery continued to be a drag on the heavy machinery industry, leading to layoffs at some producers. Manufacturers of construction supplies again reported slow but steady growth.\nBanking and Finance\nCredit conditions were little changed over the reporting period. Financial market volatility declined slightly, but remains high relative to recent history. Small business loan demand increased, primarily in the manufacturing and transportation sectors. Business loan quality continued to improve even though contacts noted that difficulty finding high-quality lending opportunities was resulting in some looser credit standards. Consumer credit demand and loan quality increased slightly over the reporting period. One contact reported expanding credit lines to existing customers and lower quality borrowers. Mortgage loan demand increased marginally and origination quality remained strong. Auto loan demand remained strong, and contacts again highlighted a trend of extending loan terms in response to already low spreads and highly competitive pricing.\nPrices and Costs\nCost pressures remained subdued in late August and September. Energy and steel prices declined, while the prices of other primary metals remained low. Most retail prices and prices charged by upstream producers were little changed. Those firms reporting price increases were more likely to cite stronger demand or increased pricing power than higher costs. Wage pressures remained mild overall but were generally stronger for higher-skilled occupations relative to lower-skilled occupations. There were a few reports from manufacturers of 5 to 10 percent across-the-board wage increases, but most contacts said their wage increases were to compensate individuals who demonstrated high productivity. Growth in non-wage costs remained subdued.\nAgriculture\nThe condition of the District's corn and soybean crops improved some over the reporting period. Relative to last year, crop conditions were better in Iowa and Wisconsin, mixed in Michigan, and worse in Illinois and Indiana. Harvesting was somewhat behind the normal pace, especially for corn, which was maturing late. Overall, yield reports suggest that the corn harvest won't reach last year's record level, while the soybean harvest may surpass last year's record. Corn prices moved up and were higher than a year ago, while soybean prices moved down and were lower than a year ago. Because of a wide range in yields and differing rental arrangements, the profitability of crop operations ranged from substantial losses to just breaking-even. Wheat prices recovered some, as did milk prices. Hog and cattle prices were lower. Poultry operations continued to rebuild from the avian influenza outbreak, and egg prices eased as production recovered. Producers, however, were concerned about a repeat outbreak as the fall migration of wild birds began.\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 14, 2015\nAggregate business activity in the Third District continued to grow at a modest pace during the current Beige Book period. In addition, most contacts continued to report modest growth in hiring, although staffing firms reported stronger results. On balance, only slight increases were reported in wages and prices, including home prices. Moderate growth of economic activity is anticipated over the next six months.\nAcross sectors, activity at staffing firms accelerated from a modest pace of growth during the prior period to strong growth during the current period. Lenders also reported moderate growth of loan volumes in contrast to more modest growth during the prior period. Nonauto retailers continued to report a moderate pace of sales growth. Sales at general services firms continued at a modest pace but appeared to have strengthened a bit and were nearing the more moderate growth that the broad sector typically reports. Commercial contractors, commercial leasing agents, and residential brokers continued to report modest growth. Auto dealers and tourism contacts also reported modest growth compared with very high levels of activity last year. Manufacturing continued to grow slightly. Homebuilders reported slight growth overall; flat for most, but stronger than before for a few.\nManufacturing\nDuring the latest Beige Book period, more contacts indicated that general activity had declined; however, contacts reported little change in the slight growth of new orders and in shipments. Moreover, employment picked up a bit among manufacturers. Gains in activity appeared to be stronger among the makers of lumber and wood products, paper products, fabricated metal products, and instruments; activity appeared weaker among the makers of chemicals, primary metals, and electronics. Firms continued to cite concerns about the strong dollar; however, a contact at one firm noted that the firm was building inventories of commodity inputs while prices were low.\nDespite the weakness in general activity suggested by contacts, their expectations of growth during the next six months have remained the same since the last Beige Book report, if not slightly better. Firms also indicated higher expectations for future capital expenditures; however, plans for future hiring sagged a bit. Still, nearly three times more firms anticipate hiring workers than firms that expect to decrease employment.\nRetail\nRetail sales continued at a moderate pace. An improving economy and continued good weather were cited as factors. Convenience store owners reported continued strong results for August and the first-half of September. Area malls reported moderate growth overall, although apparel sales were somewhat flat. Contacts continued to express optimism for growth through 2016.\nAuto dealers continued to report modest sales growth into the fall but from high levels. New Jersey dealers reported record-high levels with moderate sales growth over the prior year. Pennsylvania dealers reported slight sales growth; they had reported record highs last period. Early reports for September suggested that sales may be reaching a plateau; dealers expressed some concern that inventory levels have thinned (in part due to recalls), which may limit sales growth through year-end. Overall, auto dealers remained optimistic for continued growth through 2016.\nFinance\nThird District financial firms have reported moderate overall increases in total loan volumes since the previous Beige Book--an increase from the prior more modest rate. Commercial real estate activity, commercial and industrial lending, auto loans, and other consumer lending (excluding credit cards) were the segments with the strongest growth in volumes. Residential real estate lending volumes remained essentially flat for mortgages and refinancing loans. Banking contacts in most parts of the District described a steadily growing economy with little sign of inflation. Contacts remained optimistic for continued growth over the next six months.\nReal Estate and Construction\nOverall, Third District homebuilders have reported a slight improvement since the last Beige Book. A central Pennsylvania builder reported a pickup in traffic, a strong level of contract signings, and firm prices in August and September; sales were mixed between spec homes and contracts for delivery in 2016. Other builders in New Jersey and Pennsylvania noted ongoing softness. Builders did not cite any recent cost increases for materials; however, most continue to struggle with labor costs and securing timely delivery of subcontract work. Brokers in the major Third District housing markets continued to report modest growth of existing home sales. The relative lack of new home construction continues to buoy existing home sales. Year-over-year comparisons have begun to diminish, as 2014's sales began to strengthen near year-end. Inventory levels remain relatively unchanged at sufficiently high levels such that price increases are constrained and limited to select local markets.\nNonresidential real estate contacts reported little change to the modest pace of growth in construction and leasing activity seen earlier. Activity remains focused on urban, upscale mixed-use developments and on industrial warehouse space. One contact noted that large firms with good credit are emerging early (as much as two years in advance of lease expirations) to discuss their future office space needs--a tactic not seen yet during the current economic expansion, and an indicator of concerns that supply will become constrained and rents will rise. Contacts remained optimistic for ongoing growth of both new construction and leasing activity throughout the District into 2016.\nServices\nThird District service-sector firms reported that overall activity continued to pick up after a summer swoon--still at a modest pace, but nearing the more moderate pace of growth that generally characterizes the broad service sector. Expectations for future growth remained strong, with more than four-fifths of the firms expecting growth. On balance, firms continued to add to payrolls; over the past period, firms reported more growth of part time, temporary, and contract positions than of full-time hires.\nStaffing firms throughout the Third District reported significantly stronger growth for temporary positions and permanent placements and across all sectors. Several firms reported their strongest levels of activity since the past recession began, with growth driven by firm expansions as well as replacement hires.\nTourism activity continued at high levels for modest growth over the prior year. \"Spectacular\" weather, a later Labor Day weekend, and a papal visit contributed to increased visitors and spending in most of the Third District tourist destinations. The brief papal visit to Philadelphia shifted significant spending from Center City stores and restaurants to mountain and shore destinations, as the region's population made way for tourists from around the nation and around the world.\nPrices and Wages\nGeneral price levels have continued to rise slightly since the previous Beige Book period; however, reported increases appeared weaker than before. Roughly two-thirds of the contacts reported no significant change in the prices they pay for inputs and the prices received for their goods and services. Compared with last period, fewer nonmanufacturing contacts reported increases of prices paid, while relatively more reported decreases of prices received. In manufacturing, more contacts reported price decreases in both categories. On balance, manufacturers reported no change in prices paid and a decrease in prices received. Retail contacts reported little pressure to raise prices.\nGenerally, contacts continued to report little change in wage pressures. However, several staffing contacts indicated difficulties recruiting for low-skill positions. Low wages and compensation were cited as one factor. Another factor is the undesirability of the fluctuating schedule associated with fulfillment centers where employees are only needed for a few days at a time. In other sectors, contacts continued to report some difficulties filling highly technical positions.\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 14, 2015\nEconomic activity in the Tenth District eased slightly since the prior Beige Book, although with mixed conditions across sectors. Consumer spending fell slightly overall, despite some pickup in auto sales. District manufacturing activity continued to decline, and transportation contacts noted a marked decrease in sales. Energy firms reported moderate declines in activity, and farm income remained subdued due to weak prices. On the positive side, District real estate activity increased modestly for both residential and commercial activity. Professional, high-tech, and wholesale trade firms reported moderate increases in sales, and bankers reported steady loan demand, deposit levels, and overall loan quality. Prices grew more slowly than in recent surveys, and eased in some sectors. Although wage pressures moderated somewhat, contacts in a few industries continued to report labor shortages for skilled and entry-level positions.\nConsumer Spending\nConsumer spending activity fell slightly, but activity remained higher than a year ago, with mixed expectations heading forward. Retail sales slowed further in August and early September but were higher than year-ago levels. Several retailers noted a drop in sales for luxury and home improvement products, although sales of lower-priced items were steady. Expectations for future sales slowed modestly but remained positive, and inventory levels were expected to be unchanged. Auto sales increased modestly and were higher than a year ago, although dealer contacts expected a slowdown in sales growth for the months ahead. Auto inventories increased from the previous month and were expected to remain stable. Restaurant sales declined sharply and were moderately below year-ago levels, with contacts expecting further declines in the months ahead. District tourism activity contracted further in August and early September, and was flat versus a year ago. Tourism contacts expected modest declines in activity for the upcoming months.\nManufacturing and Other Business Activity\nManufacturing activity declined at a similar pace as in previous months, while other business activity was mixed but generally more favorable. Both durable and nondurable goods production continued to decline, although some nondurable production such as plastics, chemicals, and food improved slightly. Durable goods production remained weak, particularly for metals and machinery products. Producers continued to cite weak oil and gas activity along with a strong dollar as key reasons for the sluggish activity. Manufacturers' capital spending plans remained weak, and producers' expectations for future activity dropped to their lowest levels since 2009. Professional, high-tech and wholesale trade firms reported moderate increases in activity, with sales well above year-ago levels and solid expectations for future months. Transportation contacts noted a marked decrease in sales from the previous survey, although many firms expected activity to rise steadily in the months ahead. Most service businesses reported fairly solid capital spending plans.\nReal Estate and Construction\nDistrict real estate activity continued to increase at a modest pace in late August and September, and expectations remained positive for the months ahead. Residential real estate sales and home prices, led by strong gains in Colorado, rose moderately compared to the previous survey period, and inventories declined slightly. Sales of low- and medium-priced homes continued to outpace sales of higher-priced homes. Expectations for future residential sales were lower than the previous survey period but still slightly positive with many contacts citing seasonal factors as a reason for expected slower growth. Residential construction and related business activity slowed slightly since the last survey as housing starts and traffic of potential buyers declined but overall activity remained above year-ago levels. Commercial activity continued to expand at a modest pace in late August and September, and contacts expected this pace of growth to continue over the coming months.\nBanking\nBankers reported steady overall loan demand, deposit levels and loan quality, compared to the results of the last survey. Respondents indicated a steady demand for commercial and industrial, commercial real estate, residential real estate and consumer installment loans. Demand for agricultural loans declined slightly. Most bankers indicated loan quality was unchanged compared to a year ago. In addition, a majority of respondents expected loan quality to remain essentially the same over the next six months. Credit standards remained largely unchanged in all major loan categories. Most respondents reported stable deposit levels.\nEnergy\nEnergy activity contracted moderately since the last survey period, and expectations for future activity fell sharply as the outlook for oil prices became more pessimistic. The number of active oil and gas drilling rigs fell marginally since the last survey period, particularly in Colorado. Sustained low oil prices tightened financing for several local producers, with many commenting that they will adjust activity to operate within cash flows or will put drilling on hold. Furthermore, most contacts expected future capital spending to decrease, with several expecting a large drop. Employment in the sector also declined and several respondents expected more layoffs in the coming months as they focus on cost and debt reduction. Natural gas prices were down slightly since the last survey period as cooler temperatures across the region eased demand for cooling.\nAgriculture\nFarm income expectations remained subdued as low crop prices persisted and livestock prices declined since the last survey period. With corn and soybean crops in good to excellent condition throughout most of the District, expectations of a large harvest kept prices near last year's level and slightly less than in the summer growing months. In addition to strong production expectations, sluggish export demand for agricultural products put further downward pressure on crop and livestock prices, as both fed and feeder cattle prices decreased significantly in September. An exception to the trend of weak prices is the cow-calf sector, where profits have remained strong. Weaker farm income and reduced cash flow also continued to drive demand for further short-term financing in the farm sector.\nWages and Prices\nBoth input and finished goods prices grew more slowly than in recent surveys and eased in some sectors. Wage pressures were also mostly lower even as contacts once again noted labor shortages in key skilled positions. Retail input and selling prices rose at a slightly slower pace as did construction final sales prices. Restaurant menu prices declined, and manufacturers' raw materials and finished goods prices continued to fall. Plant managers expected raw materials prices to increase, while their future selling prices were anticipated to decline. Transportation prices were steady, although contacts expected some input price increases. Retail wages rose at a slightly higher rate, while restaurants and transportation wages increased at a slower pace. Many respondents continued to report shortages in entry level positions, service workers, truck drivers, skilled technicians, and in information technology.\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 2, 2015\nEconomic activity in the Eighth District has continued to increase at a moderate pace since the previous Beige Book. A survey of District businesses indicated that wage growth was generally moderate and employment growth was modest. Retailers and auto dealers continued to report higher sales; although some retailers did report that current quarter sales have been lower than expected. Reports from manufacturers were mixed. Banks reported increased lending activity over the past three months. Real estate conditions continued to improve at a steady pace, as home sales were up and construction activity remained robust. On the other hand, agricultural and natural resources conditions remain weak as crop conditions continued to deteriorate and coal production continued to decline.\nEmployment, Wages, and Prices\nA survey of about 150 District businesses indicated that wage growth in the District was moderate, while employment and prices grew modestly. Fifty-nine percent of contacts indicated that wages during the past three months were higher, and thirty-eight percent indicated wages were unchanged relative to the same period last year. Thirty-seven percent of contacts reported that employment during the past three months was either higher or somewhat higher as it was during the same period last year, fifty-six percent reported their employment was unchanged, and the remainder indicated a slight decline. Two-thirds of hiring managers are actively looking for employees, mainly for sales, managerial, and professional and technical positions. A contact in the construction industry mentioned the talent pool for skilled positions remained limited. Finally, about half of contacts reported that prices charged to customers were about the same during the past three months relative to last year, thirty-five percent reported an increase, and the reminder reported a decrease in prices.\nConsumer Spending\nReports from general retailers were mixed. Most contacts reported sales at or above 2014 levels in the most recent quarter. However, many of these contacts indicated that sales fell short of their expectations. Still, the majority of respondents have a somewhat optimistic outlook. A Louisville travel agency noted recent sales have exceeded expectations as consumers appear to have more discretionary income to spend on leisure travel.\nThe majority of auto dealer contacts indicated an increase in sales since the beginning of July compared with the same period last year, and many expect the trend to continue through the fourth quarter. Several dealers reported a shift toward more high-end and new cars. One dealer reported record sales of its high-end models. A few contacts noted that low gas prices continue to have a positive impact on demand. Others mentioned that parts/service volumes remain high.\nManufacturing and Other Business Activity\nManufacturing activity has been mixed since our previous report. New orders were unchanged on net, with reports of increased orders offset by an equal number of reports of decreased orders. A majority of manufacturing contacts noted that orders have been short of expectations during the third quarter. Expectations for new orders in the next quarter were similarly mixed. Contacts in furniture manufacturing have reported continued expansion in northern Mississippi amid exceptionally strong demand; in contrast, contacts in the steel industry have reported increased competition from imports and weak demand from the energy sector.\nReports from the service sector contacts have also been mixed since the previous report. Several firms that provide healthcare, food, and accommodation services reported new hiring and expansion plans in District states. A majority of contacts in the healthcare industry noted that sales met expectations in the second quarter but were largely unchanged from one year ago.\nReal Estate and Construction\nResidential real estate activity continued to expand at a steady pace. June year-over-year home sales increased 7 percent in Little Rock, 20 percent in Louisville, 13 percent in Memphis, and 16 percent in St. Louis. June monthly single-family building permits increased 34 percent in Little Rock, 12 percent in Louisville, and 7 percent in St. Louis, while permits decreased 19 percent in Memphis. Contacts noted that residential construction activity is expected to continue to increase through the fourth quarter.\nThe commercial and industrial real estate market conditions were positive throughout the District. Most survey contacts reported higher demand for office and industrial properties. Class A office vacancy rates remain low in Memphis and St. Louis. Commercial and industrial construction activity was positive throughout most of the District. Contacts in St. Louis noted a large increase in speculative construction of industrial properties. There was an increase in speculative retail areas in Little Rock, catering to smaller build-to-suit retailers and restaurants.\nBanking and Finance\nA survey of District banks showed improvement in overall lending activity over the past three months. Loan demand was stronger, especially for residential mortgage and commercial and industrial loans. For auto loans, demand was mostly unchanged. Credit standards were unchanged for most loan categories; however, a small number of bankers noted tightening standards for residential mortgages. Creditworthiness of applicants remained unchanged to slightly better in most loan categories. Loan delinquencies were lower for all loan types. Several respondents noted improved loan performance as the job market tightens and local businesses experience increased demand.\nAgriculture and Natural Resources\nDistrict crop conditions have been mixed since our previous report. Conditions deteriorated slightly for corn and soybeans but improved for cotton and rice. The share of District corn and soybean crops rated in good or excellent condition declined slightly since our previous report. However, close to 20 percent of both the corn and soybean crops across Illinois, Indiana, and Missouri was rated in very poor or poor condition. The outlook for many row-crop farmers remains negative as a result of lasting damage from record rainfall. As of late July, approximately 20 percent of the Missouri sorghum and soybean crops remained unplanted. In contrast, since our previous report, there was a slight increase in the percent of the District cotton and rice crops rated in good or excellent condition. Most of the improvement for the District cotton crop was driven by an improvement in Tennessee. District coal production continued to fall short in July, with 8.7 percent fewer tons produced than in the same month last year. Year-to-date coal production is 5.2 percent lower than at the same time last year.\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 2, 2015\nAggregate business activity in the Third District continued to grow at a modest pace during the current Beige Book period. Contacts continued to report modest growth in hiring. On balance, only slight increases were reported in wages and prices, including home prices. Moderate growth of economic activity is anticipated over the next six months.\nAcross sectors, nonauto retailers continued to report a moderate pace of sales growth; however, general services firms indicated a somewhat more modest pace this period compared to the previous reporting period. Staffing firms echoed reports of modest growth, as did lenders, commercial contractors, and leasing agents. Existing home sales and auto sales have picked up since the prior period. Auto dealers and tourism contacts reported modest growth compared with very high levels of activity last year. Manufacturing appears to have slowed somewhat to a slight pace of growth. Homebuilders reported little or no change in activity.\nManufacturing\nOn balance, Third District manufacturers reported that activity slowed--registering only slight growth during the latest Beige Book period. Contacts reported similar weakness in new orders and in shipments, although shipments picked up a little toward the end of the period. Gains in activity appeared to be stronger among the makers of lumber and wood products, fabricated metal products, and instruments; activity appeared weaker among the makers of paper products, chemicals, industrial machinery, and electronics. A few firms cited difficulties related to the strong dollar.\nDespite the current lull, expectations of business activity growth during the next six months have improved since the last Beige Book report. Firms also indicated higher expectations for future capital expenditures; however, plans for future hiring changed little. About one-third of the firms anticipate hiring, while one-tenth expect to decrease employment.\nRetail\nRetail sales continued at a moderate pace. Citing both underlying economic momentum and exceedingly good weather, convenience store owners reported very strong results for July and early August; their shore locations did especially well. Various contacts reported that outlets at tourist destinations also have been packed with cars. Area malls reported moderate growth overall, while sales at computer stores, women's apparel stores, restaurants, and personal services were stronger. Convenience store operators are bullish for the next 12 months, while mall operators have more modest expectations.\nAuto dealers continued to report strong sales through the summer months. Despite record levels last year, New Jersey dealers reported 2 percent growth in volume over the year, and Pennsylvania dealers reported 4 percent growth. Early reports of August sales were comparable to June and July. Auto dealers are optimistic for continued growth through 2016.\nFinance\nThird District financial firms have continued to report modest overall increases in total loan volumes since the previous Beige Book. Commercial real estate activity picked up during the current period--joining commercial and industrial lending and auto loans as the segments with the strongest growth in volumes. Residential real estate lending was generally flat; refinancing loans appeared to fall in volume. Banking contacts in most parts of the District described a steadily growing economy with little sign of inflation. Contacts remained optimistic for continued growth over the next six months.\nReal Estate and Construction\nThird District homebuilders have reported little change in the relatively weak levels of new contract signings since the last Beige Book. One contact did note increasing land opportunities as other builders have pulled out. This contact has hired new staff positions to take advantage of the potential growing market share. Brokers in the major Third District housing markets reported strong double-digit growth compared with last year for sales of existing homes. Last year, sales were relatively weak in many markets; however, current sales levels in the Greater Philadelphia area have rebounded and are now higher than they were two years ago. Home prices continued to rise slowly, and the inventory of homes has continued to fall. Philadelphia's Center City remained one of the District's \"hot spots,\" with greater demand, more sales, and stronger price gains.\nNonresidential real estate contacts reported little change to the modest pace of construction and leasing activity seen earlier. The Third District's larger downtown districts remain the focus of significant new construction for office and mixed-use developments. Center City Philadelphia continues to attract new investment in commercial retail space. While Philadelphia's Class A office space continued to command strong premiums, rents for most categories increased only slightly. Contacts remained optimistic for ongoing growth of both new construction and leasing activity throughout the district into 2016.\nServices\nThird District service-sector firms reported that overall activity slowed somewhat to a modest pace of growth, although it remains unclear how much of the lull is seasonal. Expectations for future growth remained broadly held and undiminished, with about four-fifths of the firms expecting growth. On balance, firms continued to add full-time positions, while firms reporting fewer part-time, temporary, and contract positions slightly outnumbered the firms reporting more. Staffing firms reported some weakness in temporary positions but were positive overall citing growing job orders for permanent positions driven by economic growth and company expansions, as well as replacement.\nAs with some manufacturers, defense-related firms continued to report limited opportunities for growth due to federal spending constraints. Tourism contacts at mountain and shore destinations continued to report record levels of summer activity throughout the Third District. While the number of visitors represents a modest improvement over a strong 2014, contacts report that tourists are spending more at area restaurants and shops. Despite these gains, the total revenues at Atlantic City casinos continued to decline.\nPrices and Wages\nThe overall price level has continued to increase slightly since the previous Beige Book period. Over 60 percent of the nonmanufacturing contacts reported little or no change in the prices they pay for inputs and the prices received for their goods and services; over three-fourths of the manufacturing contacts reported the same. On balance, a somewhat higher percentage of firms reported increases in the prices they paid as opposed to decreases. This also held true for prices received by nonmanufacturers; however, the reverse held true among manufacturing firms. Retail contacts reported little price pressure.\nGenerally, contacts continued to report little change in wage pressures; staffing firms described steady, upward movement in wages. One contact described wages as \"inching up.\" However, contacts from several different sectors independently reported facing higher costs to obtain commercial construction contracts, suggesting that wages have tightened for skilled laborers. Other contacts report some difficulties filling highly technical positions.\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 2, 2015\nSince the last reporting period, the Ninth District economy posted moderate growth. Increased activity was noted in tourism, commercial construction and real estate, residential real estate, and professional services. Agricultural conditions mostly improved. Consumer spending and the energy sector were level, and residential construction and manufacturing were mixed. Activity decreased in mining. Labor markets tightened modestly since the previous report. Overall wage pressures were mild, while prices remained relatively flat.\nConsumer Spending and Tourism\nConsumer spending was relatively level. A Minnesota mall manager reported \"flat sales, and not a lot of movement in inventory.\" A Minnesota-based retailer reported that recent same-store sales increased slightly compared with a year ago, while an apparel retailer reported that recent same-store sales decreased. A mall manager in Montana noted even sales compared with last year, and a retailer in northern Montana reported that sales to Canadian visitors were down due to the strong dollar.\nTourism remained strong across the region. The 75th annual motorcycle rally in Sturgis, S.D., attracted over 500,000 visitors, a 30 percent increase from last year's attendance, according to the state's department of transportation. A recently opened $5 million visitor center and exhibit space in western South Dakota reported strong attendance. Resort owners in north-central Minnesota reported an \"A season for the area,\" with the exception of properties damaged by a strong windstorm. Weather was also a factor in drought-stricken northwestern Montana, where wildfires broke out at Glacier National Park.\nConstruction and Real Estate\nCommercial construction remained strong across most of the Ninth District. In North Dakota, a $16 million municipal airport project and a $91 million airport expansion were recently completed. In addition, numerous highway expansions and improvements were under way in the energy-producing areas of North Dakota. Commercial building in the Minneapolis-St. Paul market was \"the strongest it's been in decades,\" according to a real estate analyst. However, the value of new commercial construction permits was down in Billings, Mont., during July from a year ago. Residential construction was mixed since the last report. The value of new residential construction permits in July was down in Sioux Falls, S.D., and Billings compared with a year earlier. However, in the Minneapolis-St. Paul area, the value of new residential building permits was up 13 percent in July compared with last year.\nCommercial real estate activity increased. A real estate firm reported recent strong leasing activity for office space in the Minneapolis-St. Paul area and that landlords were offering fewer concessions. Vacancy rates in the Minneapolis-St. Paul market fell to 9.3 percent by the end of June. Residential real estate activity was robust in many areas. In Minnesota, July home sales increased 19 percent, the median sales price increased 4 percent, and inventory decreased 14 percent compared with a year ago. In western Wisconsin, home sales increased 16 percent in July from a year earlier, while the median sales price increased 4 percent. According to real estate market reports, apartment vacancy rates were below 3 percent in the Minneapolis-St. Paul area; however, apartment vacancy rates increased in the energy-producing regions of North Dakota, as many newly built complexes were less than 80 percent occupied.\nServices\nService-providing industries grew since the last report. Home health care services were fast-growing across the Ninth District. Demand for in-home health care, including remote monitoring of patients, was up in many states; a North Dakota home care executive noted that \"tele-health services are taking off.\" Contacts indicated that the shipping season on the Great Lakes has been very busy this year. An accounting agency in Wisconsin reported that business activity was up 5 percent to 10 percent over last year.\nManufacturing\nDistrict manufacturing activity was mixed since the last report. Contacts in the metal forming industry reported exceptionally strong sales, driven by strong demand from commercial construction and power generation; in contrast, demand from agricultural equipment producers and oil extraction decreased. Recreational vehicle makers have seen strong sales recently, and a producer of parts for sports vehicles announced an expansion at a facility in Minnesota. An index of manufacturing activity released by Creighton University (Omaha, Neb.) indicated slight growth in July in Minnesota and South Dakota; the index for North Dakota remained at a level indicating contraction in activity. Developers canceled plans for a proposed $3 billion fertilizer plant in North Dakota due to projected cost overruns.\nEnergy and Mining\nThe energy sector was stable since the previous report. The number of active drilling rigs in the District as of mid-August was unchanged from a month earlier. North Dakota daily oil production increased in June to a level close to the record reached last December. A $125 million upgrade to a pipeline that transports crude from North Dakota and Canada to Minnesota refineries was approved by regulators. Mining activity decreased since the last report. Output at District iron ore mines fell substantially in July compared with a year earlier.\nAgriculture\nConditions improved for most District agricultural producers since the previous report. The majority of corn, soybean, and spring wheat acres were listed in good or excellent condition as of mid-August; progress on the spring wheat, oats, and barley harvests was well ahead of recent years. While most of the District remained free from drought conditions, federal disaster aid was offered to ranchers in 15 Montana counties stricken by severe drought. Low crop prices continued to depress farm finances. Three-quarters of respondents to the Minneapolis Fed's second quarter (July) survey of agricultural credit conditions indicated that farm incomes and capital spending had decreased in the previous three months, and a similar share expected them to continue to fall in the coming quarter. Prices received by farmers in June decreased from a year earlier for corn, soybeans, wheat, hay, hogs, milk, and chickens; prices increased for cattle, eggs, and turkeys.\nEmployment, Wages, and Prices\nLabor markets tightened modestly since the previous report. Several restaurant managers in the Minneapolis-St. Paul area recently noted difficulty finding workers to fill vacancies for a variety of positions. Businesses in eastern North Dakota noted continued difficulty finding workers to fill job openings, as did farmers in Montana and north-central Wisconsin. In Minnesota, plans were moving forward for a new distribution center, which would hire 250 workers. A home health care company in South Dakota is expected to add 200 jobs in the next three to five years. In contrast, a mining company in Montana recently announced almost 120 layoffs, and a printing company in South Dakota announced that it laid off 55 employees in response to decreased customer demand.\nOverall wage pressures were mild. An economic development official in northwestern Wisconsin noted that businesses generally have not increased wages much, but were offering a boost in pay to recruit workers employed at other firms.\nPrices remained relatively flat. Mid-August Minnesota gasoline prices were about the same as they were at the beginning of July. A number of metals prices decreased since the previous report, while several input prices for construction and manufacturing were lower than the last report and a year ago.\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 2, 2015\nThe Eleventh District economy grew at a modest pace over the past six weeks. Manufacturing demand was mixed. Retail sales were weak, with the exception of strong auto sales. Demand for nonfinancial services held steady or improved, except for railroads which saw decreased cargo volumes. Real estate activity remained solid overall, and loan demand rose slightly. Demand for oil field services remained depressed, and lower oil prices dampened outlooks. Price pressures remained subdued and employment held steady or increased. Outlooks were mostly positive, except in the energy sector.\nPrices\nPrices and input costs were generally stable, with the exception of transportation costs which fell over the reporting period as the price of fuel moved lower. A package delivery company noted that fuel surcharges will be declining through at least October, and airlines said low fuel prices were helping the industry immensely. Food manufacturers reported input prices were generally stable, but said many prices remain at historically high levels. Selling prices were mostly unchanged, although some restaurant contacts plan to raise prices to offset higher food costs and a cement manufacturer and food producer also initiated a price increase.\nOil prices fell roughly $15 per barrel over the past six weeks, reaching the lowest level since 2009. Gasoline and diesel fuel prices also fell, while natural gas prices moved up slightly.\nLabor Market\nEmployment in most industries held steady or increased, except in the energy sector where another, but smaller, round of layoffs is underway. Airlines noted increased headcounts from a year ago and restaurants said hiring increased, although they reported difficulty finding suitable workers to fill openings in new restaurants. Legal contacts remarked that business in Houston has slowed but that Dallas seems to be picking up the slack.\nWages were mostly flat to up from six weeks ago. A few staffing services contacts mentioned concern about health insurance costs rising next year. Reports of rising wages to attract truck drivers continued, and upward wage pressures were noted for some specialty skills (diesel mechanics, electrical and software engineers) and also low-skill personnel in machinery and food manufacturing.\nManufacturing\nReports from manufacturers were mixed. In construction-related manufacturing, a brick producer attributed a slight rise in demand to improved weather conditions, and a copper wire producer also said demand was better after five soft months due to wet weather. Two cement contacts said the recent drop in oil prices dampened demand and one noted it also delayed plans to expand capacity. A fabricated metals manufacturer remarked that the building boom was getting stronger and an aerospace manufacturing contact said the airline industry was doing great and will be strong for a long time to come.\nDemand for high-tech manufacturing was weak over the reporting period. Contacts reported moderate growth in select high-end business products but a general weakness stemming primarily from consumer electronics. High-tech manufacturers noted that slowing growth in Asia has had a significant effect on their expected revenues for the rest of the year, and one respondent noted that they were planning a significant reduction in capital expenditures for next year in response to slowing demand.\nRefinery utilization rates were very strong. However, contacts noted that some midstream construction projects were being delayed for the foreseeable future. Domestic sales of PVC have been lackluster this year due to softer demand growth and increased imports (partly due to the strong dollar). The strong dollar also continued to hamper petrochemicals exports.\nRetail Sales\nThe retail sector performed poorly since the last report, with contacts reporting decreased sales year over year. The weakness was partly attributed to the strength of the dollar, and one contact said stores along the Texas-Mexico border continued to perform very badly. Contacts said they expect little to no sales growth for the third quarter, with mixed levels of optimism.\nAutomobile sales demand held steady at good levels over the reporting period, and contacts said the summer selling season was stronger than last year. One contact was short on inventory from all manufacturers and another expects to see inventory shortages in the near future as manufacturers change over to the new model year. Contacts were optimistic in their outlooks for the remainder of the year.\nNonfinancial Services\nMost nonfinancial services firms reported demand was flat or up from six weeks ago, with the exception of railway services. Demand for staffing services was flat since the last report. One contact noted that demand from chemical and logistics had replaced a lot of the lost demand from oil and gas and another said that the recent dip in oil prices has negatively impacted demand from industrial manufacturers. Demand for professional and technical services increased modestly over the reporting period. Accounting firms noted robust demand and law firms noted increased demand for financial transactions. Contacts in the restaurant and food services industry said demand grew at a moderate pace. Demand was up strongly in the large metro areas but flat in smaller markets, primarily those closely tied to oil and gas activity.\nRail cargo volumes were down, with a particularly steep decline in petroleum shipments. Courier cargo volumes increased at an accelerated pace. Retail (especially e-commerce and furniture) and nondurable wholesale (especially pharmaceuticals and apparel) drove growth. Overall, transportation services contacts stated that their outlooks were not as strong as they were a year ago. Airlines reported no change in demand over the past six weeks. One airline said demand was up slightly from a year ago and that they were seeing record earnings. Another airlines contact said they were seeing record load factors and have a significantly improved outlook from a year ago because of the decline in oil prices.\nConstruction and Real Estate\nReports on home sales and buyer traffic were mixed, but outlooks were unanimously positive. Overall sales of low- to mid-priced homes remained strong, and demand in the Dallas-Fort Worth area continued to be solid. Most contacts that noted slower activity cited seasonal weakness and softness in new home sales at higher price points as factors affecting demand. Home prices continued to trend upward, although many respondents said that builders had less pricing power at higher price points. Apartment demand largely remained strong, except for slight weakening in demand for Class A space in some parts of Houston.\nCommercial real estate activity generally held steady, and outlooks remained cautiously optimistic. Demand for office space was strong in Dallas-Fort Worth, while contacts in Houston noted slow leasing activity and slight increases in sublease space. Industrial and retail leasing remained solid and construction active, although one contact said there is somewhat less enthusiasm for new industrial development in Houston.\nFinancial Services\nLoan demand grew at a modest pace over the past six weeks. Mortgage lending ticked up, although growth remained muted due to a limited supply of homes for sale. Commercial and industrial loan growth remained steady. Consumer loans, including auto financing and credit cards, continued to grow at a moderate pace. Growth in deposits was slower than usual, and depositors have slowed renewals on time deposits in anticipation of rate increases. More clients requested fixed rates on loans, which would put pressure on future margins if rates go up. Loan standards were unchanged, and loan quality improved slightly. With low oil prices and recent developments in China, outlooks for loan demand were more cautious than in the last report.\nEnergy\nDemand for oilfield services remained depressed despite the modest uptick in drilling in the Permian Basin. In addition to more job cuts, further cuts to capital spending have been announced, although these cuts are smaller than the initial round and are expected to be the last round of cuts for 2015. Multiple contacts reported that the credit situation is worsening for small to midsize producers as balance sheets deteriorate and the likelihood of a significant increase in oil prices has declined. In general, more contacts are resigned to \"lower for longer\" oil prices. Outlooks for the next two quarters are negative.\nAgriculture\nParts of the district--namely East Texas--have gotten dry again, but overall moisture conditions remained favorable for agricultural production and livestock grazing. The harvest of row crops is underway in some areas and yields have been good overall but quite variable based on when the crops were planted and how wet the fields were at that time. The cattle sector continued to benefit from good pasture conditions, low feed costs and high selling prices, which has prompted herd rebuilding. Grain prices moved lower over the reporting period and farmers were managing costs in light of lower expected revenues.\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 2, 2015\nOn balance, the Fourth District's economy expanded at a slight pace since our last report. Factory output was stable. The housing market improved, with higher unit sales and prices. Nonresidential building contractors characterized backlogs as strong or strengthening. Retailers reported that their revenues were flat over the period and year over year. New-car sales rose slightly. Exploration in the Marcellus and Utica Shales declined, whereas mid-stream infrastructure projects moved forward. Freight volume contracted slightly. The demand for business and consumer credit continued to move slowly higher.\nPayrolls expanded slightly. Newly created positions typically require a higher-level skill set than in the past. Staffing firms reported a pickup in the number of job openings in healthcare and manufacturing; however, the number of placements did not keep pace. Wage pressures were intensifying in the construction, retail, and transportation sectors. Overall, input and finished-goods prices were steady.\nManufacturing\nFactory contacts reported that demand was stable over the period. Key factors tempering output include a strong dollar, the downturn in the energy sector, and weakening demand for agricultural equipment. That said, suppliers to the motor vehicle, construction, construction equipment, and defense industries continue to see strong or strengthening demand, with improved top-line growth compared to that of a year ago. On balance, our contacts are cautiously optimistic in their outlook for the remainder of 2015. The steel industry continued to experience stiff competition from imports, competition driven in part by the strong dollar. As a result, steel shipments fell more than expected over the period. Year-to-date auto production at District assembly plants through June fell 2 percent below the prior year's level. This decline is primarily due to retooling at a medium-duty truck assembly plant.\nOn balance, capital budgets were stable over the period. Spending was largely allocated for new equipment, and to a lesser extent, maintenance projects. Some manufacturers increased capital budgets to purchase equipment that could replace labor. Steel makers and suppliers to the oil and gas industry cut budgets to control costs and preserve cash. Automakers and parts suppliers reported using overtime and adding shifts to meet demand increases instead of expanding plant capacity. Raw material and finished-goods prices were generally flat. Downward pressure on prices for steel and finished goods with a high steel content continued. Reports indicated a slight expansion in payrolls. Newly created jobs were in technology-related fields.\nReal Estate and Construction\nYear-to-date sales through June of new and existing single-family homes rose about 8 percent compared to those of the same time period in 2014. The average sales price increased by almost 6 percent. Single-family construction starts picked up over the period. Builders attributed the strong housing market to a potential rise in interest rates, an improving labor market, and rising consumer confidence. Going forward, our contacts expect some softening related to seasonal factors, higher borrowing costs, and spillover from the slowdown in the energy sector. New-home contracts remain concentrated in the move-up price point categories. Builders cited a moderate increase in new-home prices since the beginning of the year, an increase that they attributed to rising construction and land development costs. Several builders commented that the market for spec homes exists, but is limited by supply side factors, including capacity constraints and difficulty obtaining construction financing.\nNonresidential contractors reported continued robust activity over the period, with revenues rising above year-ago levels. Backlogs were described as strong or strengthening, with work booked one to two years out. Demand has been strong across multiple segments: commercial (including office), education, government contracts (including roads), and multifamily housing. Regarding multifamily, there is growing demand for affordable housing as increased rents have priced out low- and moderate-income individuals from select multifamily units. There is concern about the sustainability of the current pace of growth in the construction industry during the next three years. Some builders believe the current cycle could peak by 2017.\nCapital spending by general contractors was mainly for new equipment and technology. Materials prices were stable during the past six weeks. For the remainder of 2015, builders anticipate that material prices will increase primarily for concrete and drywall. A majority of our contacts reported a modest expansion in payrolls over the period. That said, the construction industry remains challenged by a labor shortage, including laborers, skilled craftsmen, and construction professionals. The end result is upward pressure on construction costs, including labor, and a reduction in the overall number of bids.\nConsumer Spending\nGeneral merchandise retailers reported that their revenues were flat over the period. Store traffic continued to decline, while on-line shopping expanded. Active wear and products related to outdoor activities were in highest demand. Restaurateurs experienced an increase in customer visits, particularly in the fast-casual and high-end segments. Retailers stated that revenues were flat or lower than they were a year ago. Revenues during the next three months are expected to increase in the low single digits compared to the prior three months, partly because of back-to-school sales. Vendor and shelf prices were stable, other than increases for eggs and some meat products. Hiring is limited to new-store openings. The retail sector is confronting stiffer labor competition. Higher turnover of managerial staff and hourly workers combined with a smaller pool of qualified workers is driving up wages. These situations are in addition to large minimum wage jumps in select metro areas.\nYear-to-date sales of new motor vehicles through July were about 1 percent higher compared to those of a year ago. A strong consumer preference for SUVs and light trucks continued. One auto group owner remarked that while overall pricing is stable, consumers seem willing to invest in higher-priced trim levels and options, especially in SUVs. New inventory is close to matching demand, except for the most popular models, where inventory is light. Looking forward, dealers expect unit volumes will be on par with that of 2014. Year-to-date pre-owned vehicle sales are moderately higher compared to those of last year. Capital spending was primarily allocated for expanding dealer footprints. Payrolls were stable over the period, but dealers indicated that labor markets are tight, putting upward pressure on wages.\nBanking\nBankers reported a modest increase in demand for business credit, particularly for CRE loans and, to a lesser extent, M&A financing. Consumer credit was stable over the period, with activity concentrated in auto lending and home equity products. Interest rates for business and consumer credit held steady. Almost all of our contacts noted continued strength in their residential mortgage business, which was biased toward new-home purchases. Little change was reported in delinquencies (already at low levels) and loan-application standards. Core deposit balances remain strong. Margins were characterized as very thin, and banks are looking for creative ways to generate additional revenues. Capital investment by banks was primarily for technology enhancements such as cyber-security. Payrolls increased, on net. Most hires continue to be in higher-skilled positions such as IT, risk management, and regulatory compliance.\nEnergy\nThe number of drilling rigs operating in the Marcellus and Utica Shales trended lower over the period, and is currently about 40 percent below its peak level in the fourth quarter of last year. Natural gas production through the first half of 2015 was at a higher rate compared to that of the same period a year ago. Wellhead prices for oil dipped over the period, while natural gas prices have stabilized at a low level. We heard several reports about capital budgets being adjusted downward as companies trim back their exploration and production plans. In contrast, already contracted midstream infrastructure projects are moving forward. Because of weak exploration activity, hiring within the oil and gas industry is modest and tightly controlled. Industry wage pressures have dissipated with the decline in natural gas prices.\nFreight Transportation\nReports indicated that freight volume contracted slightly over the period. Declines were prevalent in consumer goods, steel, and energy-related shipments. Growth was seen in intermodal transportation, electronics, and chemicals. Any lingering effects of the West Coast port strikes have dissipated. The outlook for the next few months is for volume to grow moderately along seasonal trends. Prices for fuel and maintenance items were fairly stable over the period. A few reports indicated that capital investment plans have been cut back due to uncertainty about future demand. Spending is mainly for replacing older equipment and maintenance projects. The labor shortage (drivers and service technicians) continued to put upward pressure on wages. Hiring was more for replacement than to add capacity.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Richmond

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"Beige Book Report: Richmond\nSeptember 2, 2015\nThe Fifth District economy grew moderately since the previous Beige Book. In manufacturing, shipments and the volume of new orders rose. Retailers reported stronger sales, and non-retail services firms saw faster growth in revenues. Demand for residential mortgage loans rose, while other consumer loan demand increased slightly. Competition among commercial lenders intensified. Residential real estate activity grew at a modest pace and commercial real estate activity increased moderately. Agribusiness strengthened slightly. In District energy markets, natural gas production and prices were unchanged since our last report, while coal production and prices declined further. Labor demand continued to rise, with increasing conversions of temporary positions to permanent employment. According to our most recent surveys, employment and wages rose at a quicker pace in the manufacturing and service sectors since the prior Beige Book. Prices of raw materials rose at a slower pace, while finished goods prices accelerated slightly. The pace of retail and non-retail price increases moved up modestly.\nManufacturing\nManufacturing activity increased moderately since our last report. Producers reported modest growth in shipments and in the volume of new orders, with pockets of strong growth in some product lines. A textile manufacturer reported that automotive-related production was very strong. Additionally, a dental products manufacturer commented that sales were strong and the volume of work remained steady, and a boat builder said sales had increased, specifically in the higher end line. A cement board producer stated that shipments had risen and he expected continued strength through the end of the year. In contrast, a variety of other manufacturers reported unchanged, but stable business conditions. Finally, a pipe producer said demand had declined in recent weeks. According to our most recent survey, prices of raw materials rose at a slower pace than during the previous report period, while prices of finished goods accelerated slightly.\nPorts\nTraffic through District ports remained robust since the previous Beige Book. Port officials reported that growth in imports exceeded export growth. Exporters of manufacturing components said that the strong dollar has made business difficult. Additionally, exports of farm and construction machinery slowed. Agricultural and automobile related exports strengthened at one port, but weakened at others. Grocery exports were generally strong. On the import side, automobile volumes rose above year-ago levels and imports of containerized products continued to break records, including apparel, housewares, furniture, and flooring, as well as machinery and auto parts. Port officials said that large amounts of cargo continued to move between the ports and the Midwest, particularly by truck. Efforts to boost productivity have stabilized port congestion despite rising volumes.\nRetail\nRetail sales rose sharply since our last report. Sales of building supplies increased, and auto dealers reported flat to higher sales. A car dealer in the Capital region said slower deliveries of new cars had left his inventory a little low, while customer traffic was bolstered by the opening of several new businesses nearby. In addition, a retailer of specialty auto parts reported stronger sales and a gas station convenience store owner attributed his growth to increased auto travel this summer. According to our latest survey, retail prices rose at a slightly faster pace since the prior reporting period.\nServices\nRevenues strengthened at non-retail services firms in recent weeks. Financial services firms, advertising agencies, and travel consultants reported faster growth. In addition, regional airports reported greater growth in revenues and enplanements. Trucking firms in the District reported stable growth, and one executive said that shipments strengthened in the second half of August. An electronic logging mandate that is set to go into effect in the fall is expected to adversely affect smaller trucking firms, and bring additional business to the larger firms that already are in compliance. Shippers have notified trucking executives that demand is expected to be high through the end of the calendar year. The pace of price increases at services firms edged up since the previous Beige Book.\nTourism continued its solid growth since the last report. A tourism executive on the outer banks of North Carolina said this has been an excellent year with bookings above year-ago levels. Seafood festivals, music events, and windsurfing regattas are scheduled to boost demand after peak summer months. A North Carolina hotelier said that transient bookings at area hotels had declined slightly year-over-year, but were offset by more military-related stays. Hotel rates and rental rates changed little in recent weeks.\nFinance\nSince our previous Beige Book, loan demand increased slightly in the Fifth District. Residential mortgage demand picked up in central Virginia, particularly for lower-priced homes. A North Carolina banker said loan growth increased only marginally, but more activity stemmed from organic growth rather than taking away business from competitors. Reports on commercial loan demand were mixed. A mortgage lender in Virginia noted an increase in commercial development lending. A contact from Washington, D.C. reported continued strength in multi-family construction but fewer projects that rely on federal government spending. A West Virginia banker said that commercial real estate loan demand was stable but tepid, and added that a lack of comps was depressing appraisal values. Competition intensified, according to several contacts throughout the District. A Maryland lender said that competition for commercial lending now included private equity and alternative financing companies, while a lender in Virginia said competition had increased for deposits from credit unions. Credit standards were largely unchanged, although some tightening was reported in West Virginia. Credit quality improved, according to a South Carolina banker; in contrast, a lender in West Virginia noted a slight decline due to a downturn in the state's energy sector. The only interest rate change reported was a marginal increase for commercial and auto loans in West Virginia.\nReal Estate\nDistrict housing market activity grew at a modest pace since the previous report. Average sale prices were stable to slightly higher, and days on the market varied across markets. Home inventories remained low on balance. A Realtor in Washington, D.C. reported increased inventory in higher-end homes. A broker in Richmond, Virginia reported strong demand in the $400,000 to $600,000 range, while a contact in Greensboro, North Carolina said that the market was strongest for lower-priced homes. According to one report, single family homes in Spartanburg, South Carolina were selling rapidly. Additionally, a Realtor in Woodsboro, Maryland said that residential sales increased, with a seller's market in the lower price ranges and some instances of multiple bids. However, a broker in northern Virginia reported less urgency from buyers, and some price reductions. A Charleston, West Virginia source also noted a slowdown in the residential market in recent weeks. Reports on residential single family construction were mixed. Multifamily leasing and construction activity remained strong.\nCommercial real estate activity increased moderately since the previous report. Vacancy rates varied by submarket and region, with scattered accounts of higher rental rates. A contact in North Carolina said landlord build-out contributions had increased, and noted more demand from retail discounters. A Realtor in Virginia Beach reported a slight uptick in the retail market, noting that class B locations were becoming more attractive due to an increase in Class A rental rates. A broker in Virginia Beach said that market activity had increased across the spectrum, and that office space below 5,000 square feet remained active, while demand for larger spaces was somewhat rare. Tight inventory for industrial space was said to be pushing up rental rates in the Carolinas, while a Baltimore broker reported more industrial warehouse vacancies. The grocery segment remained very active throughout the District. A contact in Charlotte, North Carolina described increased commercial activity, with more sales and new construction of office buildings. New retail construction increased in Virginia, while office construction decreased.\nAgriculture and Natural Resources\nModestly stronger conditions in agriculture were reported in recent weeks. Corn harvesting was underway, although a grower in North Carolina said that some crop yields were low due to dry weather conditions earlier in the season. Agribusiness contacts reported that sod sales increased since the last report. Commodity prices remained low, while corn prices declined further. Input prices remained unchanged.\nNatural gas production was unchanged overall since our previous report, while coal production declined slightly. Natural gas prices remained unchanged since last report, and coal prices declined slightly.\nLabor\nThe demand for labor rose moderately since our previous report. A staffing agent in Virginia noted that almost all skill sets are in demand at this time. Demand for employees increased throughout the District in retail, distribution centers, customer service, IT, accounting, and financial services. Shortages were cited for specialized IT workers, skilled trade subcontractors, and blue collar workers. Demand for manufacturing workers also rose but at a slower pace since our last report. Temporary workers were being converted to permanent at a faster rate in recent weeks. Maryland and Virginia employers reported difficulty recruiting workers who could pass drug tests and background checks. According to our most recent surveys, employment rose moderately for services other than retail, and increased modestly for manufacturing firms. Wage pressures were generally stable or increasing but varied by location and occupation. Some health care providers were using sign-on bonuses to attract talent. Wages rose robustly in the service sector. Manufacturing wages increased moderately and the average workweek lengthened.\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 2, 2015\nThe Second District's economy has continued to grow at a modest pace since the last report. Businesses generally report that selling prices remain stable; while input price pressures have abated somewhat, there are signs of increased wage pressures. Labor markets have tightened further in recent weeks. Consumer spending has picked up somewhat in early August but remains generally soft; tourism remains sluggish. Manufacturing activity has weakened noticeably since the last report. Housing markets continued to improve, while commercial real estate markets were mixed but generally stronger. Both commercial and multi-family residential construction remain fairly robust. Finally, banks report stronger loan demand and lower delinquency rates, especially on consumer loans.\nConsumer Spending\nRetailers report that sales were generally sluggish and little changed from a year ago in July but picked up somewhat in early August. Two major general merchandise chains characterize sales as below plan in July but on or above plan in early August. One notes that sales in New York City have been sub-par, in part attributed to the strong dollar. Similarly, in upstate New York, the strong dollar has reportedly discouraged Canadian shoppers and weighed on sales, even as overall activity has picked up in recent weeks. Retail inventories are generally said to be at desired levels. Prices are reported to be generally steady, on balance.\nAuto dealers across upstate New York indicate that new vehicle sales, after picking up in June, have remained generally steady at favorable levels in July and early August. Buffalo-area dealers indicate that sales softened a bit in early August, while Rochester-area dealers describe volume as steady in early August. Used vehicle sales were characterized as steady to increasing moderately. Wholesale and retail credit conditions continue to be described as in good shape.\nTourism activity has generally remained soft, though there have been scattered signs of a pickup. In New York City, Broadway theatres note that attendance and revenues rebounded somewhat in the latter part of July but have slowed a bit in early August. A major retailer also attributes some of its recent weakness in New York City to sluggish tourism. Hotel occupancy rates and room rates were little changed from a year earlier in Manhattan, and have softened slightly in the Albany area, but have picked up in other parts of upstate New York. Finally, consumer confidence in the region (NY, NJ, Pa) retreated sharply in July, after climbing to a multi-year high in June.\nConstruction and Real Estate\nThe District's housing markets have generally been stronger since the last report, and new multi-family residential construction remains brisk. Northern New Jersey's housing market continues to recover gradually, with a large overhang of distressed properties continuing to weigh on the market; the multi-family segment, as well as areas near New York City, continue to outperform the market as a whole. Realtors in western New York report that the housing market has picked up steam over the past month or two; low inventories and strong demand have pushed up prices and made bidding wars common. Home sales and prices across New York State more broadly have also been increasingly robust. New York City's co-op and condo market has continued to strengthen gradually: activity is down from elevated 2014 levels, but steady, while prices continue to climb, except at the high end of the market.\nResidential rental markets have been steady to somewhat stronger. Apartment rents have been running 3-5 percent ahead of a year earlier in Brooklyn, Queens and northern New Jersey, while they have been essentially flat in Manhattan and across upstate New York. Whereas vacancy rates on rental apartments have been steady or declining across most of the District, Manhattan's vacancy rate, though still quite low, has climbed steadily over the past year. One contact notes that there is a large supply of new (mainly luxury) rental apartments in the pipeline. Multi-family residential construction remains brisk across most of the District.\nCommercial real estate markets across the District were mixed but stronger, on balance, in July and early August. Office availability rates declined modestly in Manhattan and northern New Jersey, and were generally steady in Long Island and across upstate New York; office asking rents have risen at a fairly brisk pace in New York City and parts of Long Isand but have increased modestly across the rest of the District. Manhattan's retail leasing market has been steady since mid-year but has tightened somewhat in the outer boroughs, northern New Jersey and also across upstate New York. Commercial construction remains robust, though fewer new developments have been started in recent months.\nOther Business Activity\nThe labor market has gained some further momentum since mid-year. Two major New York City employment agencies report that hiring activity has picked up further, while a major agency in upstate New York notes that the job market continues to improve moderately. Job candidates are getting job offers more quickly, and there is growing upward pressure on starting salaries. The financial sector is reported to be hiring more actively, but the recent increase has been broad-based. In particular, truck drivers, IT workers, creative workers, auditors, accountants, and human resource professionals are reported to be in high demand. Temp workers are also said to be in short supply, as many are being hired permanently.\nService-sector firms broadly report that business has continued to improve moderately in recent weeks, and they remain generally optimistic about the near-term outlook. In contrast, manufacturers report that business activity has weakened noticeably, though they too express fairly widespread optimism about the near-term outlook. Unlike business in other industries, manufacturers indicate they have scaled back hiring somewhat. Both manufacturers and service firms generally report that selling prices remain flat overall. Manufacturers also report that input prices remain flat, while service-sector firms report that input price pressures, though still fairly widespread, have abated somewhat.\nFinancial Developments\nSmall- to medium-sized banks in the District report increased demand across all loan categories, with the most widespread gains for commercial and residential mortgages. Bankers indicate no change in demand for refinancing. Bankers report that credit standards were unchanged across all loan categories. The spreads of loan rates over cost of funds are reported to have narrowed across all loan categories, except for consumer loans, where bankers reported no change. Finally, bankers note declining delinquency rates across all loan categories--particularly on consumer loans.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Atlanta

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"Beige Book Report: Atlanta\nSeptember 2, 2015\nAccording to reports from businesses across the Sixth District, economic activity modestly improved from July through mid-August. Most firms continue to be optimistic and expect higher growth over the remainder of the year.\nReports from retailers were mixed with some noting improved sales growth compared with a year ago, while others experienced little to no growth. Automobile dealers continued to report solid activity. The hospitality sector remained upbeat. On balance, residential brokers and builders cited that sales of existing and new homes were ahead of last year's levels and home prices continued to rise modestly. Commercial real estate firms reported that demand continued to improve and construction increased from a year ago. Manufacturers noted that new orders and production were up since the previous report. Bankers indicated that lending activity continued to modestly improve. Businesses reported continued tightness in the labor market. Firms cited modest wage growth and subdued non-labor input cost pressures.\nConsumer Spending and Tourism\nDistrict retailers reported mixed activity since the last report. Some contacts reported healthier sales growth compared with a year ago while others reported slow or no growth year-over-year. Overall, merchants expect improved activity as the next major holiday falls on a weekend. Auto sales continued to experience robust sales activity.\nReports on tourism and business travel remained upbeat from July through mid-August. Hospitality contacts in Georgia, Florida, and Louisiana reported strong occupancy numbers as attendance at major conventions and attractions was up from a year ago. Year-to-date Mississippi casino gaming revenues increased compared with the same period last year. Industry contacts expect business and leisure travel to exceed forecasts for the remainder of 2015.\nReal Estate and Construction\nDistrict contacts indicated that real estate activity continued to improve since the last report. Three-fourths of residential brokers noted that home sales met or exceeded their plans. The majority of contacts reported that home sales increased from the year-earlier level, and that inventory levels remained the same or fell. Buyer traffic was also reported to be up relative to one year ago. Most brokers continued to report modest home price appreciation. Brokers' outlook for home sales activity remained positive, with most expecting sales to hold steady or increase slightly over the next three months.\nThe majority of homebuilders continued to indicate that construction activity was up from year-earlier levels. Reports on new home sales and buyer traffic described activity as being flat to up slightly from one year ago. Most builders indicated that their inventory of unsold homes was flat to slightly up compared with the prior year's level. Builders also reported modest home price appreciation. The outlook among builders for new home sales and construction activity over the next three months remained positive, with the majority indicating that they expect activity to hold steady or increase slightly.\nCommercial real estate brokers from across the District indicated that demand continued to improve for all property types, but they cautioned that the rate of improvement varied by metropolitan area, submarket, and property type. The majority of commercial contractors indicated that nonresidential construction activity was up from their year-earlier levels. Reports on apartment construction continued to suggest that activity remained robust. Most contacts reported a backlog that was greater than the previous year, with activity booked six months to three years out. The outlook among District commercial real estate contacts remained positive, with most expecting the pace of construction activity to increase slightly.\nManufacturing and Transportation\nDistrict manufacturers reported that business activity was solid from July through mid-August. Contacts indicated that new orders and production had rebounded from the previous report and were now on par with the levels observed earlier in the year. Firms noted that payrolls continued to increase at a steady rate, finished inventory levels had fallen somewhat, and delivery times for inputs reduced. Reversing the previous report's moderate uptick, input prices were reported to have fallen. Optimism for future production levels strengthened since the previous report, with half of contacts expecting an increase over the next three to six months.\nTransportation activity in the District was roughly unchanged since the last report. Port contacts indicated continued growth in container traffic, bulk and break bulk cargo, and autos and machinery. Year-to-date total rail traffic was flat to slightly down, but intermodal volumes continued to grow; coal and iron and steel scrap shipments declined substantially compared with year-earlier levels. Trucking contacts cited slight decreases in overall tonnage over the reporting period; however, tonnage was up notably year-over-year.\nBanking and Finance\nBanking contacts continued to report that credit was available for qualified borrowers. Competition for loans remained elevated and some contacts noted loan growth and increased loan volume for home purchases versus refinancing. Banking contacts reported that even though credit was readily available at a low cost, many firms used cash for capital expenditures or funded investments internally. Credit union contacts indicated auto lending remained strong. Bankers in Louisiana continued to report a slowdown in lending tied to the energy sector. Compliance costs continued to burden community banks.\nEmployment and Prices\nEmployment continued to increase in most areas of the District, with reports of greater competitiveness and tightening in the labor market. Firms continued to report challenges retaining employees. Firms that were experiencing difficulties filling vacancies, noted ramping up internal training programs to better position themselves to take on inexperienced workers.\nInput cost pressures remained muted across most sectors. The majority of contacts continued to cite relatively stable annual wage growth of 2 to 3 percent. However, labor costs continued to accelerate for some specialized positions that are in high demand. Referral and signing bonuses and other benefits enhancements remained popular tools used to attract and retain talent. Softness in prices for imported goods and many commodities continued to bolster margins as firms indicated keeping final prices steady. According to the Atlanta Fed's survey of business contacts, unit costs were up 1.5 percent in July relative to a year ago, however, respondents expected that growth in unit costs would rise to 2.0 percent over the next 12 months.\nNatural Resources and Agriculture\nWeak global demand and an oversupply of oil resulted in continued downward pressure on oil prices. Contacts indicated that low oil prices are driving large producers to reassess the timing and scale of deepwater projects which continued to result in labor cutbacks, while small production companies have taken advantage of the lower cost of deepwater drilling prices and expanded their drilling activity. Firms engaged in refining continued investment to expand capacity to provide flexibility in order to refine lighter crude from shale. Utilities experienced increased usage in residential, commercial, and industrial power.\nAreas affected by drought conditions expanded in the District since the last report. Most drought-affected areas were categorized as abnormally dry to moderate, but parts of southeastern Florida experienced severe to extreme drought conditions. All District states forecasted lower cotton production than last year. Conversely, District soybean and peanut production forecasts showed a net production increase. The USDA reported year-over-year farm real estate value increasing everywhere in the District except Georgia which reported a slight decline.\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 2, 2015\nGrowth in economic activity in the Seventh District remained moderate in July and early August, and most contacts expect activity to rise at a similar pace over the next 6 to 12 months. Growth remained moderate for consumer spending, business spending, and manufacturing production, while construction and real estate activity continued to increase at a modest pace. Credit conditions were little changed. Cost pressures also were about the same as during the last reporting period, with prices for most raw materials remaining low and limited wage growth. Downstream, there was little change in retail prices. The condition of the corn and soybean crops was uneven across the District, with record yields possible in some areas and low yields likely in others.\nConsumer Spending\nGrowth in consumer spending continued at a moderate pace over the reporting period. Spending on discretionary items such as sporting goods, entertainment, general merchandise, and apparel generally increased at a faster rate than spending on necessities such as food and beverages. New and used vehicle sales continued to be strong. Vehicle transaction prices moved up further, increasing dealer profitability. Relatively low gas prices continued to cause a shift in consumer preferences toward light trucks.\nBusiness Spending\nGrowth in business spending remained moderate in July and early August. Most retailers and manufacturers reported comfortable inventory levels, though stocks remained slightly elevated at steel service centers because of the large volumes of imports over the past year. Some retail contacts said they planned to carry lower-than-normal inventories of winter-related items because of forecasts that a strong El Ni\u00f1o effect will raise temperatures this winter. The pace of capital spending remained moderate. While a declining number of contacts reported spending for expansion, there were increased reports of mergers and acquisitions. Hiring and hiring plans also grew at a moderate pace. Labor demand was again strongest for skilled workers, particularly for many professional and technical occupations, sales, and skilled manufacturing and building trades. A staffing firm reported declining revenues, which they attributed primarily to moves by their clients toward hiring more permanent workers and toward more outsourcing.\nConstruction and Real Estate\nConstruction and real estate activity increased modestly over the reporting period. Residential construction ticked up, with building primarily concentrated in urban single-family markets. Residential rents, home prices, and home sales all increased slightly, while home affordability was little changed. Demand for nonresidential construction edged up. Commercial real estate activity again increased moderately, with growth spread broadly across the retail, industrial, and office segments. Commercial rents were up slightly, while commercial vacancy rates moved down and availability of sublease space was little changed. Contacts reported particularly strong demand in urban areas, but noted that both the demand for and quality of buildings in suburban markets have shown improvements as well.\nManufacturing\nManufacturing production continued to grow at a moderate pace in July and early August. Growth in the auto and aerospace industries remained strong, with greater-than-expected gains in auto sales. Trucking firms' fleet expansions led to a moderate increase in heavy truck production. Growth in most other manufacturing industries was more limited. Capacity utilization in the steel industry remained low, as demand grew only slightly, and inventories at steel service centers remained elevated. Steel imports were still at high levels, though contacts expect that recently filed trade cases will slow the pace of imports going forward. On balance, specialty metals manufacturers reported mild growth, with those primarily serving the auto and aerospace industries seeing strong growth while those primarily serving the oil and gas industry experienced declining orders. Demand for heavy machinery was flat, as steady growth in construction machinery was offset by declines in agricultural machinery. Manufacturers of construction supplies again reported slow but steady growth.\nBanking and Finance\nCredit conditions were little changed over the reporting period. Financial market volatility increased, while credit spreads and leverage remained largely unchanged. New loan demand from small businesses weakened, though credit line utilization ticked up. Middle- market loan demand increased, driven primarily by recapitalization. Commercial real estate lenders continue to be concerned that valuations are too high, leading some to put limits on the size of loans they will make for financing new purchases. Consumer credit demand increased slightly, with an uptick in applications from lower quality applicants. Demand for mortgage funds increased with rising home prices, though there was downward pressure on mortgage rates as competition among lenders picked up. Auto loan demand remained strong, and one contact reported pressure to extend loan terms in response to already low spreads and highly competitive pricing.\nPrices and Costs\nCost pressures were again subdued in July and early August. Energy prices remained low, along with prices of steel and other primary metals. Most retail prices changed little, with firms that did report price increases most likely citing increased demand for their products as opposed to rising costs. Wage pressures remained mild and were generally stronger for higher-skilled occupations. However, many contacts that paid workers near the minimum wage reported increasing wage pressures and greater difficulty finding workers. A staffing firm reported accelerating wages, though much of the ramp-up appeared to be because of a shift in the occupation mix toward higher-skilled workers. Non-wage costs declined slightly as fewer contacts reported pressures from benefits.\nAgriculture\nThe condition of the corn and soybean crops was uneven across the District, with record yields possible in some areas and low yields likely in others. Nationally, yield expectations moved higher, contributing to lower corn and soybean prices. Corn and soybean producers who locked in prices during the rally earlier in the summer should be able to break even on a portion of their output, but most others likely would not cover input costs if they end up selling their harvest at current prices. Wheat prices were also down. Hog prices were flat, dairy prices moved up, and cattle prices moved down. Poultry houses started to receive birds to replace those culled because of the influenza outbreak earlier this year, but the recovery has been slow, so contacts expect egg and turkey production to remain lower than normal for the rest of the year. Egg prices increased again.\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 2, 2015\nMost business contacts in the First District continue to report moderate growth. A couple of sizable retailers, by contrast, cite slowdowns in sales growth in recent months although other retailers maintain year-over-year increases in activity. Ten of 12 responding manufacturers report ongoing demand increases, notwithstanding recent increases in the value of the dollar relative to foreign currencies. Most software and information technology services firms are also seeing revenue growth, while increases at staffing firms are even more robust. Residential and commercial real estate markets across the region continue to improve. Aside from staffing firms, no respondents cite wage increases and headcount changes are small. With minor exceptions, prices are said to be stable.\nRetail and Tourism\nFirst District retailers responding in this round report year-over-year comparable-store sales ranging from flat to mid-single digit increases. Two contacts say their sales results continue to improve or remain strong, but two others cite softer sales across all regions of the United States beginning in either mid-June or mid-July. Inventories are slightly higher as a result of these slower-than-expected sales, but not a cause for concern. One contact experiencing the slowdown characterizes the U.S. consumer as taking \"a little pause,\" while the other expects the slowdown to continue into the holiday season, and has downgraded his 2015 sales forecast to an increase of 2.5 percent to 3 percent, from 5 percent.\nBusiness and leisure travel to the Boston area continues to be very robust. Over the first six months of 2015, the average hotel occupancy rate was 79.9 percent, up 1 percentage point from a year earlier, while the average hotel room rate was up 7.7 percent over the first six months of 2014. Now that the high summer travel season is well underway, the average room rate for June is up 11.2 percent over June 2014. January to June attendance at Boston area museums and attractions was down 4 percent year-over-year; much of this decline is attributed to poor weather and disrupted public transit in 2015:Q1; attendance in June alone was up 3.5 percent year-over-year, and anecdotal evidence suggests that the numbers will be strong for July and August. Boston area hotel revenues are forecasted to be up 8 percent year-over-year for 2015 and up a further 7 percent in 2016.\nManufacturing and Related Services\nOf 12 contacted manufacturing firms, 10 report stronger demand. The two exceptions are a producer of fitness equipment and a dairy firm; the dairy firm cites a slowdown in sales of specialty products such as almond milk. Many of our contacts mention China as a performance factor, but so far the effects are modest. One contact, a producer of biotechnology equipment, says their sales in China exceeded expectations in the most recent period. A manufacturer of systems for new buildings reports a definite softening in construction activity in China which affects demand for its products. The strengthening dollar continues to present problems for some of our contacts. A producer of biotechnology equipment says that sales are going to be about $1 billion lower (on $14 billion in revenue) as a result of the stronger dollar. The firm reports, however, that the devaluation of the yuan was good news overall as their yuan costs exceed their yuan sales. Sources of demand growth in the U.S. are varied. A tool maker says that strong construction activity is leading to purchases of replacement tools for existing workers and new tools for workers new to construction trades.\nDespite strong demand, most respondents report little or no net hiring. For example, a manufacturer of semiconductor equipment says sales were up 60 percent in the second quarter versus the same period last year but they still are not planning to increase headcount. A manufacturer of bulk chemicals said that they are seeing a much higher number of quits either to go to other firms or for retirement, after many years in which the quit rate was exceptionally low. A manufacturer of building equipment says that the China slowdown will eventually lead to \"cost containment\" in their U.S. operations, including broad hiring restrictions in the near future, even on their business lines with no exposure to China. Contacts report no significant wage pressure. Input and output prices are generally said to be stable, but there are some exceptions: A manufacturer of bulk chemicals says that slowing demand in China has reduced the price of inputs. A textile equipment firm says it raised prices 5 percent in April and has not noticed any reduction in demand.\nCapital expenditures are up for most contacts, generally in line with earlier plans. The outlook is positive for all respondents except the dairy firm, which expects flat sales going forward.\nSoftware and Information Technology Services\nReports from New England software and information technology services firms are varied. Most contacts cite mid to high-single-digit growth in both sequential and year-over-year revenues, with customer demand and sales volumes continuing to expand. By contrast, one firm reports decreases in both sequential and year-over-year revenues, due to weakened demand in China and the strong U.S. dollar. Selling prices, wages, and capital and technology spending have largely remained constant in recent months. Most firms have maintained or slightly increased headcount; one firm cut jobs within its weaker product lines. Most contacts are cautiously optimistic about the next few months, expecting continued revenue growth through the end of the year; only one firm reduced its year-end forecast, projecting a larger revenue drop than it had earlier.\nStaffing Services\nFirst District staffing contacts report robust growth in the New England region, with high-single-digit to low-double-digit year-over-year revenue growth. Labor demand has risen, particularly in the IT and healthcare sectors, which reportedly reflects increased confidence in the overall economy. Labor supply continues to be \"very tight\", with contacts noting shortages of IT workers, software developers, skilled trades workers, and network administrators. The rate of temporary-to-permanent job conversion remains strong. Firms have expanded their advertising presence on job boards and social media sites such as LinkedIn in order to better attract top candidates. Pay rates have grown by 3 percent to 20 percent, with the sharper increases reflecting a greater supply-demand gap. Most firms have maintained their profit margins by increasing bill rates in line with the rising pay rates. Looking forward, contacts are optimistic, expecting the positive growth trajectory to continue through the rest of the year. Some contacts express concerns about the Chinese economy, the strong dollar, and stock market fluctuations.\nCommercial Real Estate\nContacts in the First District give mostly upbeat reports concerning the region's commercial real estate markets. Extending trends reported last time, office rents in Boston continue to climb, office vacancy rates continue to fall, and investors are pushing prices for Boston's commercial properties to near all-time highs. A few Boston contacts note that, over the past couple of years, the pace of delivery of new office space has been slow relative to historical norms under similar market conditions, contributing to the recent surge in rents. However, contacts also report that there has been a modest uptick in office construction activity in Boston's Seaport and Financial districts, involving a combination of pre-leased space and unleased space, and in some cases incorporating additional uses such as retail and residential space. Construction of hospitals and related facilities also continues to expand in the Boston area.\nIn Providence, office leasing activity experienced only a very modest summer slowdown, maintaining a decent pace that is expected to strengthen come September; a contact in that city reports that the number of large blocks of vacant office space is down considerably in recent months. The Portland area continues to see strong leasing activity across the office, retail, and industrial sectors, pushing vacancy rates into the single digits, and the city's hotels are enjoying very high occupancy rates. In Hartford, leasing activity is light amid flat economic activity but the city's investment sales market remains strong and has recently attracted the interest of foreign buyers. A regional lender to commercial real estate notes that his bank saw a recent spike in loan payoffs resulting from an increased number of property sales among its borrowers; at the same time, it struggles to secure new lending opportunities amid fierce competition from insurance company lenders and from the commercial mortgage backed securities market.\nThe shortage of skilled construction workers and accompanying wage pressure continues to weigh on the outlook for construction activity in Boston--according to one contact, within the next six months relevant labor costs in the metropolitan area could rise to levels that would significantly curtail construction activity relative to current plans. With the exception of a Hartford contact--whose outlook is modestly pessimistic--most commercial real estate contacts are optimistic concerning leasing fundamentals moving forward, but Boston contacts continue to be \"nervous\" about current high sales prices and low capitalization rates.\nResidential Real Estate\nClosed sales of both single-family homes and condominiums increased on a year-over-year basis in all six First District states in June. Contacts in the real estate industry say that sellers seem to be recovering from the harsh winter weather, and increased activity that began to show up in the last Beige Book continues. June represented the first year-over-year increase in closed sales of single-family homes for Massachusetts in 8 months. In Boston, where sales increased 10.2 percent, the volume numbers were near record highs. Median sales price increased from a year earlier on single-family homes in half the First District states and fell in Vermont, Connecticut, and Maine. Contacts in Massachusetts characterize the price appreciation as modest. Pending sales increased from July 2014 for nearly every state in the First District; the exception was condos in Maine. Inventory has decreased in every state but Connecticut. Massachusetts contacts say building and zoning laws continue to make new construction difficult. Contacts say low inventory has created a strong \"sellers' market.\" Additionally, the available months of supply decreased in every state's single-family home market. The number of days spent on the market also decreased for both single-family homes and condos in most New England states.\nContacts express a generally optimistic outlook as the market continues to recover from the unseasonably slow winter. Some note that sellers may still be working on repairs before putting homes on the market and expect upward trends in sales and prices to continue into the fall. Many are weary of the inventory shortage and express concern that rising prices and potentially increasing interest rates will begin to present financing issues for buyers.\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 2, 2015\nEconomic activity in the District grew at a moderate pace during the reporting period of July through mid-August. Overall price inflation remained limited, but upward wage pressures increased further. Retail sales grew moderately, while demand for business and consumer services picked up further. Manufacturing output grew modestly. Agricultural activity ticked up. Real estate market activity expanded at a moderate pace. Lending trended up, and credit conditions improved somewhat.\nPrices and Wages\nOverall price inflation was little changed from the limited pace noted in the prior reporting period. Prices for health-care services and pharmaceuticals rose further. Prices for agricultural products generally increased, with reduced acreage and yields creating modest supply shortages for some products. Contacts in regions with strong residential construction growth noted moderate price increases for construction materials. By contrast, retail grocery prices were largely flat, held down in part by added supply from e-commerce retailers. Energy price declines and dollar appreciation held down prices charged by utilities and prices of assorted raw material imports. Contacts in the technology industry reported a drop in advertising costs as firms shifted campaign platforms from traditional desktop computers to cheaper mobile devices.\nUpward wage pressures strengthened across the District. Hiring picked up in the information technology (IT) sector, and contacts reported robust across-the-board wage gains for workers in the Internet services and information security sectors. Wage pressures continued to mount in the construction sector with contacts from urban technology centers, such as the San Francisco Bay Area and Seattle, reporting shortages of skilled labor and significant wage increases. A few contacts in the banking sector observed strong demand for talented employees and, due to vigorous competition, were unable to pass higher wages through to the prices charged for banking services. Hospitality sector contacts in some parts of the District expressed concerns that recent minimum wage increases may raise costs in their industry.\nRetail Trade and Services\nRetail sales grew at a moderate pace over the reporting period. Contacts noted that low oil prices continued to raise purchasing power and boost general consumer demand. Automobile sales remained strong, particularly for trucks and SUVs, with one contact reporting that high demand forced dealers to shop around for additional inventory. Sales of computer hardware and software were strong, spurred in part by the actual or anticipated launch of new technologies. Sales of food and beverage products grew, but at a slower pace than earlier in the year. Clothing and apparel sales expanded moderately after accounting for the normal back-to-school shopping boost. Contacts mentioned that e-commerce sales continued to grow briskly.\nDemand for business and consumer services expanded further. Contacts in the technology services industry reported strong growth, with some Internet-based businesses reporting double-digit sales growth over the prior year. Contacts expect business demand for IT services to remain robust, particularly for big data processing and security services. Demand for health-care services grew further, driven primarily by an aging population and the associated increase in the incidence of chronic diseases. Contacts in the legal services industry reported weak demand as firms moved away from hiring outside counselors and instead leaned more heavily on in-house staff.\nManufacturing\nOutput in the manufacturing sector grew modestly. Contacts reported that new orders of semiconductors expanded at a slow but steady pace. On balance, the biotech and pharmaceutical sectors expanded as financing remained widely available and firms continued to consolidate through new mergers and acquisitions. Deliveries of commercial aircraft were robust with some contacts reporting a backlog of orders fueled by international and domestic demand for newer fleets. Output in the aerospace and defense sector grew modestly, although contacts expressed concern over the uncertainty surrounding the outcome of looming Congressional spending negotiations. Wood product exports remained weak, with competing Chinese supply and weaker demand from that country cited as key factors.\nAgriculture and Resource-Related Industries\nAgricultural activity grew slightly over the reporting period. Contacts reported that drought remained a serious concern in many areas, with uneven impacts across products. Wheat and potato output grew modestly; however, harvests for nuts, grapes, and fruit trees were earlier and smaller than anticipated. Higher prices somewhat offset lower production in regard to farm revenue, but concerns remained that inadequate water resources pose a significant challenge to future harvests. An ample supply of corn reduced overall feed prices through substitution for more expensive feed products. Output and sales of forestry products grew slowly, and additional supply reportedly is threatened by spreading wildfires in the West.\nReal Estate and Construction\nReal estate activity expanded at a moderate pace overall but was uneven throughout the District. Contacts reported continued growth for residential and nonresidential construction and sales, with particularly rapid growth in urban technology centers. Some contacts noted an excess supply of retail space and tighter underwriting standards for new construction projects, which constrained the growth of new commercial units in their areas. On balance, demand for new residential units remained solid, and contacts noted that consumer preferences continued to shift towards multifamily units. However, a few contacts noted that residential construction activity slowed in their region, predominantly due to tighter borrowing conditions and shortages of skilled labor and available land. Contacts generally expect residential and nonresidential construction activity to grow over the rest of this year, though at a slower pace compared with the first part of the year.\nFinancial Institutions\nLending activity grew modestly over the reporting period. Healthy borrower balance sheets bolstered perceived creditworthiness and enhanced lenders' willingness to supply credit. Delinquencies and nonperforming loans receded further. Some contacts reported that borrowers remained somewhat hesitant to leverage and expand operations, which has slowed loan demand growth slightly. Other contacts reported that ample credit availability has enabled borrowers to shop around for the best terms. Liquidity remained robust, and deposit flows continued to increase. Net interest margins remained somewhat compressed, and some contacts noted that interest rate risk will pose a challenge to returns in the near term.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

National Summary

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"Beige Book: National Summary\nSeptember 2, 2015\nPrepared at the Federal Reserve Bank of Boston based on information collected on or before August 24, 2015. 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 indicate economic activity continued expanding across most regions and sectors during the reporting period from July to mid-August. Six Districts cited moderate growth while New York, Philadelphia, Atlanta, Kansas City, and Dallas reported modest increases in activity. The Cleveland District noted only slight growth since the last report. In most cases, these recent results represented a continuation of the overall pace reported in the July Beige Book. Respondents in most sectors across Districts expected growth to continue at its recent pace, but the Kansas City report cited more mixed expectations.\nDistrict reports on manufacturing activity were mostly positive, although among these, the Cleveland, St. Louis, Minneapolis, and Dallas Districts painted a somewhat mixed picture across manufacturing sectors. Only the New York and Kansas City Districts cited declines in manufacturing.\nRetail contacts in a majority of Districts reported that their sales and revenues continued to expand. By contrast, the Cleveland and Minneapolis Districts cited flat consumer activity since the last report, Atlanta was mixed, and Dallas reported decreased sales year-over-year. Most Districts reported increased auto sales. Among Districts with information on tourism, activity was strong in most reports.\nDemand for nonfinancial services, including staffing, generally expanded over the reporting period. Districts mentioning the transportation sector mostly noted activity increases. Districts reporting on the banking sector mostly tallied increases in both business and consumer loan volumes. Credit quality was reported to be improving in most Districts, while credit standards were generally said to be unchanged.\nReports on residential and commercial real estate markets across the Districts were mostly positive. Existing home sales and residential leasing widely improved, with home prices moving up in most areas. Commercial real estate activity also rose in most Districts; commercial construction activity ranged from strong in the Cleveland and Minneapolis Districts to up only slightly in Chicago, while commercial leasing was reported to have increased across the board.\nAgricultural conditions were mixed across Districts. Farm contacts indicated that anticipated yields were up for corn and soybeans, but conditions deteriorated in the St. Louis and Kansas City Districts; drought was an ongoing concern in the San Francisco District and was also a factor in parts of the Atlanta and Minneapolis Districts. Districts reporting on the energy sector indicated that conditions were stable to declining; coal production was down in the Richmond and St. Louis Districts, while oil-related activity declined in the Cleveland, Atlanta, and Dallas Districts.\nMost Districts reported modest to moderate growth in labor demand, although Boston, Cleveland, and Dallas cited only slight increases in hiring. This tightening of labor markets was said to be pushing wages up slightly in selected industries or occupations, especially in the New York, Cleveland, St. Louis, and San Francisco Districts. Across all Districts, input and selling prices were reported to be stable or up only slightly.\nManufacturing\nDistrict reports on manufacturing were generally positive during the reporting period. Ten Districts reported stable or positive growth and only two, New York and Kansas City, registered declines. Several areas of strength were noted: Auto sales have generally been above expectations and Cleveland, Richmond, and Chicago all reported strong growth in auto-related manufacturing. Aerospace, particularly commercial aviation, continued as a plus for manufacturing production in the Chicago, Dallas and San Francisco Districts. Demand from the construction industry was strong, with the Boston, Philadelphia, Cleveland, Chicago, Minneapolis, and Dallas Districts reporting increases in demand for construction-related goods from lumber to construction machinery. Even in Districts where manufacturing activity expanded, several factors were mentioned as damping demand: The Cleveland, Chicago, and Minneapolis Districts reported weakness in the agricultural sector and declines in demand for agricultural machinery. Falling energy prices have led to a reduction in demand for machinery (reported by Cleveland and Minneapolis) and metals (Chicago and St. Louis). The Boston, Philadelphia, Cleveland, Richmond, and Dallas Districts cited the strong dollar as a weakening influence. Manufacturing contacts in Cleveland, Chicago, and St. Louis reported that cheap steel imports were depressing demand and leading to low capacity utilization in that industry; these cheap imports were attributed to the strong dollar and slowing economic growth in Asia. Reports from three Districts explicitly mentioned the Chinese slowdown as a factor, noting reduced demand for wood products (San Francisco), chemicals (Boston), and high-tech goods (Dallas).\nDistrict reports cited no major revisions to firms' capital spending plans, although contacts in the Kansas City District, for example, expected recent declines in activity to lead to a curtailment of capital expenditure. In general, District reports indicated the manufacturing outlook was positive; even contacts in Kansas City, one of the two Districts to report a decline in manufacturing activity, were modestly positive about the future.\nConsumer Spending and Tourism\nDuring this survey period, retail sales results varied across the Districts. Richmond reported that sales rose sharply, while Philadelphia, Chicago, Kansas City, and San Francisco indicated that consumer spending increased at a moderate pace. Most retail contacts in the St. Louis District said that sales were at or above 2014 levels, but many indicated that these results fell short of expectations. Boston and Atlanta reported mixed results--both Districts had some sources reporting that sales growth was improved or still strong, but other retailers reporting flat or slowing sales. The Minneapolis District noted that retail sales were largely flat. The New York District characterized retail sales as generally sluggish and below plan in July, but on or above plan in early August. Cleveland reported that sales were flat over the survey period and lower compared to a year ago. Retail contacts in the Dallas District reported decreased year-over-year sales, partly attributed to a strong dollar negatively affecting sales along the border area with Mexico. New York and Minneapolis reported that the strong dollar discouraged sales in Canadian border areas. Contacts in Philadelphia, Cleveland, Atlanta, St. Louis, and Kansas City were optimistic that retail sales will stay on pace or improve in the coming months, while Dallas contacts reported mixed levels of optimism amid expectations of low or no sales growth for the third quarter.\nThe Philadelphia, Atlanta, Chicago, and San Francisco Districts reported continuing strength in auto sales. Dallas said that sales remained steady over the survey period, and that demand was up compared to last summer. Most auto dealerships located in Upstate New York reported that after picking up in June, vehicle sales remained favorably steady. The Cleveland and Kansas City Districts reported modest year-over-year increases in auto sales, while Richmond reported flat or higher sales over the survey period. Expectations are generally optimistic that auto sales will improve or continue to be strong through the end of the year.\nThe Boston, Richmond, Atlanta, and Minneapolis Districts reported that travel and tourism activity continued to be strong, and contacts expected these positive trends to continue. Tourism activity in the New York District remained generally soft. Hotel occupancy rates and room rates were flat in New York City, but picked up in other parts of New York State. Restaurant sales were up in the Philadelphia, Cleveland, and Kansas City Districts.\nNonfinancial Services\nDemand for nonfinancial services generally expanded at a modest to moderate rate since the last report. The Kansas City and Dallas Districts cited modest to moderate increases in demand for professional and technical services. Business activity in the software and information technology service sector increased in the Boston and San Francisco Districts. Reports from the Minneapolis and Dallas Districts indicated that accounting activity was strong in recent months. Several Districts, including St. Louis, Minneapolis, and San Francisco cited growth in the healthcare services sector. Both the St. Louis and Dallas Districts reported expansion in the food services industry. Dallas District law firms noted increased demand for legal services but activity at legal firms in the San Francisco District continued to be weak. Staffing services contacts from most Districts reported increases in overall labor demand and hiring activity and a tightening labor market, with Districts citing particular shortages of specialized software and IT workers, skilled trade's workers, and truck drivers.\nDistrict reports on transportation activity were mixed but mostly positive overall. The Cleveland District reported a contraction in overall freight volume, with decreases in shipments of consumer goods, steel, and energy-related products, but increases in shipments of electronics and chemicals. The Richmond and Minneapolis Districts noted robust port activity. The Atlanta District reported modest overall growth in transportation, with increases in automobile and machinery shipments. Trucking activity was stable in the Richmond District, but decreased in the Atlanta District. Contacts in the Dallas District reported only slight growth in the transportation services sector, with increases in courier cargo volumes, but decreases in rail cargo volumes. Overall, most nonfinancial services contacts across the Districts were reported to have a positive outlook, expecting business growth to continue through the rest of the year.\nReal Estate and Construction\nResidential real estate activity improved across the 12 Districts, with home sales and home prices increasing in every District, while construction activity was more mixed. Richmond and Kansas City indicated that sales of low- and medium-priced homes continued to outpace sales of higher-priced homes. Cleveland, Richmond, and San Francisco noted that demand was more robust for multifamily homes. Construction activity was reportedly increasing in most Districts, but was moderate or flat in the Boston, Philadelphia, Richmond, Minneapolis, and Dallas Districts. Contacts in the Cleveland District attributed increases in construction activity to expectations of a rise in interest rates, the improving labor market, and rising consumer confidence. However, Cleveland also cited supply-side constraints and difficulty obtaining construction financing. Similarly, Boston noted difficulty in obtaining new construction permits. San Francisco reported that construction activity slowed in some areas due to tighter borrowing conditions and shortages of skilled labor and available land. Contacts in many Districts attributed increases in home prices to robust demand and declining inventory. Inventories continued to decline or stay flat, with the exception of the Kansas City District, where they rose slightly. Boston, New York, and Richmond specifically commented on low inventory leading to bidding wars among buyers. Cleveland builders cited rising construction and land development costs as upward price drivers. New York and Dallas both indicated that prices have climbed for low- to medium-priced homes but price pressures are softer for higher-priced properties. Rental markets remained strong nationwide. Overall, the residential outlook was positive, with the majority of Districts expecting this increased activity to continue.\nDistrict reports on commercial real estate were positive on balance. Commercial leasing activity increased in the Richmond, Atlanta, Chicago, St. Louis, Minneapolis, and Kansas City Districts. Leasing activity was steady in the Philadelphia District, steady or increasing in the New York District, and mixed in the Boston District. Leasing demand was described as very strong in large cities, including Boston, New York, Philadelphia, Chicago, and Dallas, but Houston saw weak leasing demand. Significant office rent increases were reported for downtown Boston and New York City while slight increases were seen in Center City Philadelphia. Retail rents and industrial rents increased in portions of the Richmond District. Contacts in the Boston and Dallas Districts were optimistic or cautiously optimistic about commercial leasing activity moving forward; contacts in the Kansas City District expected modest improvement in leasing demand. Commercial construction activity increased in the Cleveland, Atlanta, St. Louis, and San Francisco Districts. Commercial construction was described as active in the Dallas District, strong-to-robust in the New York and Minneapolis Districts, and steady at a solid pace in the Philadelphia District's urban centers. In urban Boston, office construction activity increased from levels that were seen as below-normal in relation to fundamentals, and elsewhere in the Boston District commercial construction activity was mixed. The outlook for commercial construction was generally positive in the Boston, Cleveland, Atlanta, and San Francisco Districts, but risks to growth in construction activity include rising labor costs for skilled workers (noted by Boston and Cleveland contacts), and tighter underwriting standards for construction loans (noted by San Francisco).\nBanking and Finance\nReports on banking activity were mostly positive during the reporting period. Overall loan demand increased in most reporting Districts, with the exception of mixed demand in Chicago and steady demand in Kansas City. Growth in loan activity in other Districts ranged from slight in Richmond to moderate in Philadelphia and St. Louis. Though contacts in Atlanta reported moderate growth, bankers in some parts of the District reported a slowdown in lending tied to the energy sector. Commercial and industrial loan demand improved in Philadelphia, Cleveland, and St. Louis, though it was categorized as steady in Kansas City and Dallas and mixed in Richmond. Commercial real estate lenders in Chicago continued to be concerned that valuations were too high; leading some to put limits on the size of loans they make for financing new purchases. On the consumer lending side, demand for credit was up in most Districts. Growth in demand for consumer loans was reported to be moderate in Dallas and stable in Cleveland. Several Districts, including Philadelphia, Atlanta, and Chicago, noted strong increases in demand for auto loans, though demand for such loans was flat in St. Louis. Demand for mortgages increased in several Districts, including Cleveland, Richmond, Atlanta, Chicago, and St. Louis. Although mortgage lending ticked up in Dallas, growth remained muted due to a limited supply of housing.\nCredit conditions remained stable or improved across Districts. Delinquency rates declined across all loan categories in the New York, St. Louis, and San Francisco Districts. Credit standards were largely unchanged, with a few exceptions in the Richmond and St. Louis Districts who noted tightening standards. Contacts in Boston, Atlanta, and Chicago, reported competition among lenders for loans. Bankers in New York, Cleveland, and San Francisco reported narrow net interest margins.\nAgriculture, Oil, and Other Resource-based Industries\nHarvests were underway in many Districts and agricultural conditions mostly continued to improve during the reporting period; however, conditions deteriorated in the St. Louis and Kansas City Districts and were mixed in the Chicago District. Anticipated soybean yields were high, despite extensive damage to St. Louis District crops from record rainfall earlier this year and uneven conditions in the Chicago District. High corn yields nationally reduced the cost of feed, and positive cow-calf margins made up for low crop prices in some areas. Cattle prices increased in the Minneapolis and Dallas Districts, and decreased in Chicago. Egg production remained sluggish, as poultry houses continued to replace birds lost to the avian flu earlier this year. The Kansas City District reported financial strain in regions most dependent upon crop production as prices fell and credit conditions worsened. Similarly, capital spending and demand for agricultural equipment decreased in Minneapolis, while Dallas District farmers managed costs in the face of low expected revenues. The Atlanta and Minneapolis Districts experienced some isolated severe drought, and San Francisco expressed serious concerns about drought and inadequate water resources affecting future harvests.\nThe energy sector was flat or down in all Districts. Respondents in the Kansas City and Dallas Districts revised expectations to deal with a long term low-price environment for oil; meanwhile drilling activity rose slightly in Minneapolis, Kansas City, and Dallas despite depressed demand. In Cleveland, drilling activity in the Marcellus and Utica Shales fell further, to 60 percent of the peak level in the fourth quarter last year. Hiring in oil and gas industries was modest in Cleveland, and firms were cutting jobs in the Atlanta and Dallas Districts. Energy-related capital expenditures were down in the Cleveland and Dallas Districts and mixed in Atlanta, where large firms were reassessing deep water projects but small firms expanded activities and refiners continued to invest in expansion. Coal production was down in the Richmond and St. Louis Districts, and mining activities decreased in the Minneapolis District. Natural gas production was up year-over-year in the Cleveland District, and flat in Richmond.\nEmployment, Wages, and Prices\nMost Districts reported slight or modest growth in employment since the previous Beige Book. Boston reported little or no hiring except via its staffing sector, while Philadelphia, Cleveland, St. Louis, Minneapolis, and Dallas cited slight to modest increases in employment. Atlanta, Richmond and Chicago experienced moderate increases in employment, and San Francisco reported an increase in IT sector hiring. The New York labor market reportedly gained further momentum and saw strong growth in hiring. The Richmond, Chicago, St. Louis, Minneapolis, Kansas City, and San Francisco Districts reported labor shortages for certain skills or difficulty finding workers, especially for IT and other technical positions. Firms in the Atlanta District cited challenges retaining employees and filling vacancies.\nWages were relatively stable in most Districts, with slight to moderate increases since the last report. However, several Districts reported increasing wage pressures caused by labor market tightening. St. Louis reported almost three-fifths of responding firms had raised wages in the last three months. New York cited increased pressure on starting salaries, while Cleveland noted intensifying wage pressure in the construction, retail, and transportation sectors. San Francisco reported upward wage pressures for skilled workers in the IT, information security, and construction sectors. In the Kansas City District, wage growth slowed in many sectors despite selected labor shortages. Dallas noted flat wages, but also wage pressures for some specialty skills.\nBoth input and output prices remained stable in most Districts. The Boston, New York, Philadelphia, Cleveland, Atlanta, Chicago, St. Louis, Minneapolis, Dallas, and San Francisco Districts all reported that prices were mostly flat or had increased only slightly. In Richmond, retail and finished goods prices accelerated slightly, while in Kansas City prices were mixed, with retail input and output prices increasing at a modest pace while manufacturing and crop prices decreased moderately.\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 2, 2015\nEconomic activity in the Tenth District continued to rise modestly in July and early August, with mixed conditions across sectors. Consumer spending continued to grow at a moderate pace as retail, restaurant, and auto sales increased and District tourism activity was flat. Manufacturing activity continued to decline primarily due to weakness in food, beverage, plastics, and metal production, but expectations remained modestly positive. Professional, high-tech, and transportation firms reported moderately higher sales compared to a year ago and expected further gains over the coming months. Real estate activity across the Tenth District continued to increase at a modest pace, but residential real estate contacts expected the pace of expansion to slow over the coming months. Banking contacts reported stable loan demand, loan quality and credit standards as well as a slight increase in deposit levels. Energy activity remained weak as oil prices fell to six-year lows. District farm income remained subdued, agricultural credit conditions weakened, and crop prices dropped sharply as a strong fall harvest was expected. Prices were mixed across sectors in the District, and wage growth slowed despite some reported labor shortages.\nConsumer Spending\nConsumer spending activity rose at a moderate pace, with further growth expected in the months ahead. Retail sales increased moderately from the previous survey period and remained higher than year-ago levels. Several retailers noted an increase in sales for lumber, upholstery, and summer-related products, while sales of higher-end products were weak. Expectations for future retail sales remained strong, and inventory levels were expected to rise moderately. Auto sales increased moderately and were slightly above year-ago levels, with sales expected to climb higher in the months ahead. Dealer contacts noted increased sales of larger vehicles such as trucks and SUVs, and slower sales for small and hybrid cars. Auto inventories fell modestly, although most contacts expected levels to rebound in the next six months. Restaurant sales remained solid and were moderately higher than year-ago levels, with a slight increase in activity expected over the coming months. District tourism activity was roughly flat since the previous survey, but contacts expected activity to fall moderately in the months ahead.\nManufacturing and Other Business Activity\nManufacturing activity declined at a moderate pace, while other business activity was mixed. Manufacturing shipments fell to their lowest levels of the year, as production decreased in nearly all District states. The downturn was mostly attributable to a sharp decrease in food, beverage, and plastics production and continued weakness in metal production. Expectations for future activity remained modestly positive, but manufacturers' spending plans decreased markedly. Wholesale trade firms also reported a decrease in activity over the previous survey period, although sales were higher than a year ago and expectations were positive heading forward. Professional, high-tech, and transportation contacts reported increasing monthly sales, with activity moderately above last year's levels. Firms expected activity to rise considerably in the months ahead. Most transportation and wholesale trade firms reported modest capital spending plans, while professional and high-tech contacts noted stronger plans for capital expenditures.\nReal Estate and Construction\nDistrict real estate activity continued to increase modestly in July and early August as both residential and commercial real estate markets expanded. Residential real estate sales and inventories increased modestly since the previous survey period, and sales of low- and medium-priced homes continued to outpace sales of higher-priced homes. Increases in home prices remained robust, and additional gains were expected. Expectations for residential real estate activity remained positive, but many respondents expected slower growth over the coming months due to normal seasonal factors. Residential construction contacts reported a moderate rise in housing starts, while contacts at construction supply firms noted a slight decline in activity. Commercial activity continued to expand at a modest pace in July and early August and was moderately above year-ago levels. The commercial real estate market was expected to continue to strengthen at a modest pace over the coming months.\nBanking\nBankers reported steady overall loan demand and loan quality, as well as a slight increase in deposit levels since the last survey period. Respondents indicated a steady demand for commercial and industrial, commercial real estate, residential real estate, agricultural and consumer installment loans, and loan quality was unchanged compared to a year ago. In addition, a strong majority of respondents expected loan quality to remain essentially the same over the next six months. Credit standards remained largely unchanged in all major loan categories. Deposit levels increased slightly, with respondents primarily split between reporting increased or steady deposit levels.\nEnergy\nTenth District energy activity stabilized somewhat, but remained weak. The outlook for the remainder of the year turned cautious as producers dealt with a second drop in oil prices and expectations of a prolonged low-price environment. Since the last survey period, the number of active oil drilling rigs rose slightly but remained low. Drilling permits increased, but some respondents commented that well completions were on hold. Crude oil inventories in Cushing, Oklahoma were mostly flat, despite record high refinery utilization rates and strong seasonal demand for petroleum products. Pressured by global factors, oil prices fell sharply in July and early August to six-year lows. Several respondents also expressed concerns about the lifting of sanctions against Iran and its potential negative effects on prices and production. Seasonal demand for air conditioning has increased the use of natural gas in the power sector and lifted prices slightly.\nAgriculture\nDistrict farm income remained subdued, and agricultural credit conditions weakened since the last survey period. After rebounding briefly in June, crop prices declined sharply in July and early August due to improved growing conditions and expectations of a strong fall harvest. Although loan repayment rates declined slightly compared to a year ago, bankers reported only minor loan repayment problems, and very few applications for operating loans were denied. Signs of financial strain were strongest in regions most dependent on crop production, such as Nebraska, Kansas, and western Missouri. District contacts were more optimistic in Oklahoma and Colorado, where farm income was supported by positive profit margins in the cow-calf sector. Low crop prices, however, and expectations of reduced farm income led to further modest declines in District cropland values.\nWages and Prices\nPrices across industries in the Tenth District were mixed while wage growth slowed in many sectors even though contacts cited labor shortages for workers across many skill levels. Retail input and selling prices both increased at a modest pace, and retailers expected selling prices to rise moderately in the near future. Restaurant menu prices rose modestly. Manufacturers' raw material and finished good prices declined moderately since the previous survey period, and contacts expected these prices to continue to decline in coming months. Transportation input and output prices declined modestly, while construction materials prices rose at a slightly slower pace than the previous survey period. Retail and restaurant sector wages rose slightly, while wages in transportation increased moderately. Contacts cited labor shortages for low-skilled and entry-level positions, skilled technicians, software engineers, and truck drivers.\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 15, 2015\nEconomic growth in the Second District has continued at a modest pace since the last report. Businesses generally report that selling prices remain stable, despite ongoing upward pressure on input prices and wages. Labor market activity has picked up in recent weeks. Consumer spending has generally remained soft since the last report, though there were scattered signs of a pickup toward the end of June; tourism has weakened. Manufacturing activity has remained mostly flat since the last report. Housing markets showed further signs of improvement, while commercial real estate markets were mostly steady. Both commercial and multi-family residential construction have picked up noticeably. Finally, banks report stronger loan demand, and lower delinquency rates, with particularly widespread improvement on both these measures in the commercial segment.\nConsumer Spending\nRetailers report that sales continued to be sluggish and on or below plan in May and June. One major general merchandise chain reports that sales were below plan, while another characterizes sales as on plan. A major retailer of building materials reports a pickup in sales. A contact at a major upstate mall notes that discount retailers are performing better than higher priced stores. Retail inventories are generally said to be at satisfactory levels, though one chain indicates that West Coast port delays and the corresponding late arrival of some merchandise has elevated inventories a bit. Prices are reported to be generally steady, on balance.\nAuto dealers across upstate New York indicate that new vehicle sales were mostly flat in May but showed some signs of picking up in June; sales are reported to be down somewhat from a year earlier but still at reasonably high levels. Sales of used autos are reported to have picked up somewhat. Dealers characterize wholesale and retail credit conditions as in good shape.\nTourism activity has shown further signs of slowing--particularly in New York City, where both hotels and Broadway theatres report slowing business and declining revenues, and a major retailer attributes recent weakness to reduced tourism. Buffalo area hotels also report lower occupancy rates but indicate that future bookings look promising. Despite the general softness in consumer spending and tourism, consumer confidence in the region (NY, NJ, Pa) surged in June, reaching its highest level since before the recession.\nConstruction and Real Estate\nThe District's housing markets have been steady to somewhat stronger since the last report, while multi-family construction has picked up noticeably. Realtors in western New York report that, after a weak first quarter, the housing market continued to strengthen in June and in the second quarter overall; strong demand and lean inventories have driven up prices and made bidding wars increasingly common. Reports from Realtors across New York State more broadly also point to lean and declining inventories and steady home price appreciation. New York City's co-op and condo market has been steady to somewhat stronger since the last report: selling prices of apartments rose moderately in Manhattan but were flat in Brooklyn. Sales volume declined citywide and was down noticeably from a year earlier--reportedly reflecting a combination of lean inventories, the stronger dollar, and the fact that 2014 sales levels were extraordinarily high.\nResidential rental markets were steady to somewhat stronger. In New York City, rents were steady overall, drifting lower on larger apartments but rising modestly on smaller units. Rents have increased slightly in Manhattan, remained flat in Brooklyn and eased somewhat in Queens; the inventory of available rentals has risen but remains low across the city. Northern New Jersey's rental market has tightened, with vacancy rates declining and rents rising fairly briskly. Across the rest of the District, both rents and vacancy rates were little changed.\nCommercial real estate markets across the District have been steady overall. Office availability rates were steady in Manhattan, Long Island and across upstate New York; rates edged up in the Westchester-Fairfield market but declined in northern New Jersey, though they remain quite elevated. Asking rents for office space were little changed, except in Manhattan, where they continued to trend upwards. Retail rents in Manhattan also rose, but its retail availability rate has climbed to a multi-year high.\nOffice construction rebounded sharply in the second quarter--mainly in northern New Jersey and New York City--after a sluggish first quarter. Multi-family construction has also picked up considerably throughout the District, especially in New York City. A local real estate contact notes that new development, which has been predominantly rentals in recent years, is shifting back towards condos. New construction starts, as well as the amount of space under construction--for both office and apartment buildings--reached their highest levels in more than a decade.\nOther Business Activity\nManufacturing firms report that business activity remained essentially flat in May and June, and contacts express somewhat less optimism than previously about the near-term outlook. Contacts in wholesale distribution, on the other hand, indicate some pickup in business, and a transportation industry contact reports that trucking activity remains brisk. Businesses indicate that selling prices have been flat to up slightly but continue to report moderate upward pressure on both wages and input prices.\nThe labor market has picked up since the last report. A major New York City employment agency reports that conditions have strengthened substantially across the board in recent weeks and notes that hiring activity is unusually brisk for this time of year. There is also reported to be increased demand for human resource professionals to recruit new employees--particularly in the finance and legal sectors. An upstate New York employment agency also reports strong labor market conditions and notes a shift from contract hiring to more direct hiring. Both contacts note some upward pressure on starting pay, as more job candidates have been receiving multiple offers. There continues to be excess demand for tech workers, as well as truck drivers. Manufacturers, on the other hand, have scaled back hiring plans somewhat.\nFinancial Developments\nSmall- to medium-sized banks in the District report that loan demand increased across all categories--particularly for commercial mortgages, as well as commercial and industrial (C&I) loans. Bankers also note an increase in demand for refinancing. Contacts report that credit standards were again unchanged across all loan categories. Bankers report that spreads of loan rates over cost of funds decreased, with narrowing most widespread on commercial mortgages and C&I loans. Finally, banks report that delinquency rates were unchanged on consumer loans but improved in all 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 15, 2015\nThe Ninth District economy grew moderately since the previous report. Increased activity was noted in consumer spending, tourism, commercial construction, commercial and residential real estate, and professional services; agricultural conditions improved slightly. Activity decreased in energy and mining, while manufacturing and residential construction were mixed. Labor markets tightened slightly since the last report. Overall wage increases remained moderate, while prices were generally level since the previous report.\nConsumer Spending and Tourism\nConsumer spending showed signs of modest growth. A Montana mall manager reported that sales levels were above a year ago. Restaurant sales in northwestern Minnesota have picked up, and business owners were optimistic for the summer season. Retailers and hospitality managers in eastern North Dakota reported sales activity has been flat in recent months, and they anticipate consumer spending will remain flat during the summer. Visits from Canadian shoppers were down due to the strong dollar. An auto dealers association in Montana reported strong sales in May in contrast to slower sales earlier in the year.\nTourism activity was solid. Many state tourism representatives across the District predicted a strong season compared with recent years. Tourism in western South Dakota started early due to mild weather and was on pace for a strong summer season. A resort owner in central Wisconsin indicated that they were \"very optimistic\" about the coming tourism season. A tourism official in the Upper Peninsula of Michigan noted that summer was looking strong. According to a survey of Minnesota lodging businesses, 53 percent of respondents expect summer revenue to increase from a year ago, while 11 percent expect decreases.\nConstruction and Real Estate\nCommercial construction activity continued to grow since the last report. In western North Dakota, a number of publicly funded road and building projects were underway. Developers broke ground on a $250 million mixed-used project in western Montana. The value of new commercial building permits in Sioux Falls, S.D., and Billings, Mont., year-to-date in May was much higher than a year ago. Residential construction in the District was mixed. The value of residential permits in the Minneapolis-St. Paul area increased 15 percent in June compared with a year earlier. In contrast, the value of new residential construction permits in Sioux Falls was down more than 30 percent year-to-date in May from last year, while the value of new residential permits in Billings was down slightly.\nCommercial real estate activity increased since the last report. Developers purchased land for a $500 million, 1-million square-foot mixed-use development in western North Dakota. Several large data center operators were in the process of expanding facilities in Minnesota. Two large retail lease deals were recently signed in downtown Minneapolis. Activity in residential real estate markets increased since the last report. In Minnesota, May home sales increased 13 percent, the median sales price increased 8 percent, and inventory decreased 8 percent, compared with a year ago. In Sioux Falls, May home sales increased 12 percent, the median sales price increased 10 percent, and inventory decreased 19 percent. In western Wisconsin, home sales increased 9 percent in May from a year earlier, while the median sales price increased 10 percent. In northwestern Wisconsin, real estate agents reported \"the busiest spring in 10 years.\" Meanwhile, an agent in western North Dakota said sales were flat.\nServices\nProfessional services activity increased. A recent professional services survey conducted by the Minneapolis Fed and Minnesota Department of Employment and Economic Development indicated that sales and profits grew over the past year and firms expected growth to continue. An accounting firm in Minnesota commented that \"clients are feeling good and business is as good as ever.\"\nManufacturing\nDistrict manufacturing activity was mixed since the previous report. An index of manufacturing activity for Minnesota and South Dakota released by Creighton University (Omaha, Neb.) increased in June from the previous month; the index for North Dakota fell to a level indicating contraction in activity. A producer of plumbing equipment announced an $18 million expansion to a pipe manufacturing plant in Minnesota. A facility that produces road construction equipment announced an expansion. However, some contacts were concerned about a slowing in exports.\nEnergy and Mining\nThe slowdown continued in the energy and mining sectors. The number of active drilling rigs in the District fell further since the previous report, with some leveling in the pace of decline in recent weeks. Diesel production began at a new refinery in North Dakota. State regulators approved a $250 million solar energy project in Minnesota; several smaller-scale solar facilities were also announced across the District. Output at District iron ore mines fell in May compared with a year earlier. Reports indicated that demand for sand used for hydraulic fracturing was down 30 percent compared with last year, with prices down as much as 25 percent.\nAgriculture\nDistrict agricultural conditions improved slightly since the previous report. Crop progress was ahead of schedule in District states, with most corn, soybean and spring wheat crops currently rated in good or excellent condition. While solid rains have left most of the District free from drought, farmers in some areas reported that wet conditions were holding back the hay and winter wheat harvests. No new outbreaks of avian flu have been reported in recent weeks. Prices received by farmers in May decreased from a year earlier for corn, soybeans, wheat, hay, hogs, milk and chickens; prices increased for cattle, eggs and turkeys.\nEmployment, Wages, and Prices\nLabor markets tightened slightly since the last report. According to the survey of professional services firms, 21 percent expected to increase employment over the upcoming year, while 7 percent expected decreases in staffing levels. Plans were recently announced for a new retail distribution center in Minnesota that will create 1,000 jobs. A business service specialist noted that there is strong demand across a broad range of industries for both high school and post-secondary school graduates in Minnesota. An expansion of a grocery store in South Dakota will lead to 100 new hires. However, an equipment manufacturer in North Dakota noted it will cut almost 40 jobs, following 80 layoffs earlier in the year. Labor markets continued to loosen somewhat in the energy-producing areas of North Dakota and Montana.\nOverall wage increases remained moderate. Results from the professional services survey showed that, on average, wages increased by 2.1 percent over the previous 12 months and were expected to increase 2.3 percent over the following 12 months. According to a recent survey of central Minnesota businesses by St. Cloud State University, 59 percent of respondents expect to increase employee compensation over the next six months, up from 44 percent in last year's survey.\nPrices were generally level since the previous report. Minnesota gasoline prices at the end of June were about the same as prices toward the end of May. According to a food company in Minnesota, input cost inflation was estimated at 2 percent for 2016. Meanwhile, metals and lumber prices dropped since the previous report.\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 15, 2015\nEconomic activity in the Eighth District has increased at a moderate pace since the previous Beige Book. Most businesses reported improving sales and recent reports of planned activity have been mostly positive. Residential housing market conditions continued to improve at a steady pace, and commercial construction contacts noted a backlog of projects. A survey of small to medium-size District banks indicates strong growth in bank lending. On the other hand, natural resources and agricultural conditions remain weak. Persistent wet weather has led to deteriorating crop conditions, and District coal production continued to decline.\nConsumer Spending\nConsumer spending continued to grow at a modest pace since the previous report, with most business contacts reporting year-to-date sales at or above 2014 numbers. Several retailers and restaurants cited sustained increases in demand as reasons for expanding their business or adding new locations. Retail openings were announced throughout the District in the restaurant, grocery, outdoor specialty store, electronics, and apparel sectors. New tourist attractions have also opened within the District.\nReports from local auto dealers on year-over-year sales were mixed. Multiple luxury auto dealers noted strong sales in recent months, while other dealers reported a slowdown since the end of the first quarter. Several auto dealers indicated an increase in the business seen by their service and parts departments, with some attributing this to customers repairing their used cars rather than purchasing new vehicles.\nManufacturing and Other Business Activity\nReports of plans for manufacturing activity have been positive since our previous report. Several manufacturing companies reported plans to add workers, expand operations, and/or open new facilities in the District. In particular, several furniture manufacturers in northern Mississippi have expanded operations or made plans to add capacity in response to increased demand from hotels. Other firms that produce fabricated metal products, plastics and rubber products, machinery, and transportation equipment have also announced plans to hire additional employees and expand operations in the District. In contrast, a few firms that manufacture chemical products and primary metal products reported plans to lay-off workers or close facilities.\nReports of plans in the District's service sector have also been positive since the previous report. Firms that provide administrative and support services and warehousing and storage services reported new hiring and expansion plans in District states. In contrast, several firms in education and health services reported plans to lay-off employees.\nEmployment, Wages, and Prices\nAnecdotal evidence suggests that wage pressures remain moderate and employment growth remains modest. Contacts noted starting wages and salaries have been increasing for administrative support and information technology positions, as well as some temporary positions. A staffing contact in the District noted an uptick in hiring for human resources positions, for both recruiting and staff development. Employers continued to note a shortage of qualified employees, especially in the commercial construction industry where companies are experiencing a smaller pool of job candidates. A contact in the information technology sector noted labor supply for IT consultants is probably at its lowest level in 20 years.\nReal Estate and Construction\nResidential real estate conditions continued to improve at a steady pace. District home sales increased on a year-over-year basis in May: sales were up 5 percent in Louisville, 10 percent in Little Rock, 4 percent in Memphis, and 3 percent in St. Louis. Residential construction in May was mixed when compared with the same period last year. May monthly single-family building permits increased 25 percent in Little Rock and 17 percent in St. Louis. Permits were the same in Memphis and decreased 14 percent in Louisville.\nCommercial and industrial real estate market conditions were positive throughout most of the District. Contacts in Memphis reported low vacancy rates, strong demand, and continued fast absorption in the industrial market. Contacts in Louisville reported that warehouse vacancy rates continued to decrease and vacancy rates tightened in part due to increasing property demand from e-commerce companies. Commercial and industrial construction activity was positive throughout most of the District. Commercial construction contacts noted more projects than one year ago, and many have a backlog of projects. A mixed-use area with apartment, office, and retail space is planned in a long-vacant property in Louisville.\nBanking and Finance\nTotal loans outstanding at a sample of about 80 small and midsized District banks increased about 11 percent in June relative to the same time last year. Overall loan growth was strong although slightly slower than previous quarters. Real estate lending increased about 9 percent over the period of reference. Commercial and industrial loans increased 13 percent over the period, and loans to individuals increased 11 percent. During this period, total deposits at these banks increased 8 percent.\nAgriculture and Natural Resources\nDistrict crop conditions deteriorated since our previous report due to persistent severe weather in the Midwest. About 59 percent of District corn crops remained in good or excellent condition, representing close to a 16-percentage-point decline since our previous report. Notably, Illinois had a record amount of rainfall across the state, topping the previous record established in 1902. A southern Illinois corn farmer noted, \"There is good drainage around here, but there's no way to deal with that much rain.\" The damage to field crops also extended to District soybeans, where 76 percent of the crop is rated in good or excellent condition, down 10 percentage points since our previous report. In contrast, the condition of District cotton, rice, and sorghum crops improved moderately since our previous report. District coal production continued to fall short in May, with 13.8 percent fewer tons produced than in the same month last year. Year-to-date production is 7.4 percent lower than at the same time last year.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Boston

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"Beige Book Report: Boston\nJuly 15, 2015\nBusiness conditions are stable or improving on balance in the First District. Retail contacts report sales increases that range from modest to large and they characterize their capital spending plans as aggressive. Revenue growth is moderate-to-strong among consulting and advertising contacts, with the exception of an economic analysis firm that posted flat sales. Manufacturers give mostly positive reports, although the stronger dollar weighed on some. No significant upstream pricing pressures are reported among either manufacturers or retailers, although one retailer raised its own prices to cover a wage increase. Labor market tightness is reported for experienced retail salespeople as well as for high-technology workers and various professional positions. Movements in headcounts are mixed, as two manufacturers report cutting jobs while business services firms are expanding payrolls. Boston's commercial real estate market is seeing accelerating rent growth and aggressive bidding for investment properties. Commercial leasing activity held steady in Providence and Portland and slowed in Hartford. Sales of single-family homes increased in all New England states except Massachusetts, and median sales price increased in four of six states. Condominium sales and price movements are mixed across New England states. Inventories of both types of dwellings remain very low in Massachusetts and declined over-the-year in all of the District's states. The outlook is mostly positive among retail contacts, stable or improving among most manufacturing contacts, and quite positive among business services contacts. Residential real estate contacts are optimistic in the face of perceived increases in buyer confidence, while the outlook among commercial real estate contacts ranges from newly pessimistic in Hartford to bullish in Boston and moderately optimistic elsewhere in the region. Several real estate contacts, both commercial and residential, expressed ongoing uncertainty over the impact of eventual interest rate increases.\nRetail and Tourism\nThis round's report is based on a limited sample. Contacts report same-store sales increases ranging from low single digits to low double digits. Demand for home improvement goods is strong and sales of big-ticket furniture items posted solid increases. Inventories are well managed and wholesale prices are steady or up by about 1 percent over one year ago. One contact reports having raised some prices in order to cover salary increases for a class of employees that had not seen a salary increase in five years. One firm finds that recently it has become more difficult to hire experienced salespeople. Capital spending plans among reporting contacts are fairly aggressive and are focused on investment in new stores and online sales channels. There is a general sense among contacts that the economy continues to improve and that consumer confidence is greater as a result. Contacts expect both the economy and consumer confidence to continue to strengthen through the end of 2015 and into 2016.\nManufacturing and Related Services\nOf the nine firms contacted this cycle, only one reports declining sales. The firm in question attributes that decline to the strengthening U.S. dollar, a development that has rendered sales to Canadian customers only marginally profitable. The remaining 8 contacts report sales and demand levels that are either equal to or higher than their respective levels one year ago and generally in line with previous forecasts. A toy manufacturer says that the effects of the West Coast port strikes, which had earlier in the year made it difficult to deliver products, are by now largely played out. A second firm also notes that the strength of the dollar dampened its sales growth in foreign markets. A semiconductor manufacturer reports that this highly cyclical industry is on the upswing. Two firms are reducing their inventories for structural, rather than cyclical, reasons. Among contacts, pricing pressures are minimal in both upstream and downstream markets. Two contacts report that headcounts at their respective firms are being reduced. In one case the decline is being achieved through attrition rather than layoffs and reflects a secular decline in demand for the firm's services. In the other case a firm is shifting jobs from the First District to the Midwest while achieving net layoffs. The outlook is stable or improved for all but one contact.\nSelected Business Services\nConsulting and advertising contacts report strong demand at their firms in the second quarter. However, an economic analysis firm reports that demand is flat because financial crisis-related litigation continues to wane. A marketing firm and a health care consulting firm both report moderate year-over-year growth to the second quarter. Contacts at two health care consulting firms note that profit margins at pharmaceuticals firms are getting tighter. Strategy consultants experienced double-digit revenue growth over the past twelve months and note a trend toward increasing consolidation in their industry. A government consultant posted moderate growth, driven by a welcome rebound in government contracts. Most contacts plan to give compensation increases that are in line with or slightly above the rate of general price inflation, but two contacts follow a profit-sharing model of compensation. All contacts either hired in the past quarter or plan to expand personnel by year's end. Planned headcount increases for the year ranged from 1 percent to 10 percent, with upside potential in the case of the most optimistic firm. Openings for high-technology positions, MBAs and expert analysts are reportedly hard to fill. Contacts are generally quite bullish on the U.S. economy for the remainder of 2015 and identified fewer external risks than they did last quarter. Some contacts perceive the Greek debt situation to be a risk, if not a particularly worrying one, and some foresee an uptick in uncertainty as the U.S. enters a presidential election cycle.\nCommercial Real Estate\nContacts report that office rent growth is accelerating in greater Boston, especially in urban submarkets. One contact describes Boston's office leasing market as the strongest in 50 years. Prices for investment properties in greater Boston continue to rise and, despite accelerating rent growth, contacts remain concerned that recent sales prices embed overly optimistic rent growth assumptions. In Portland, commercial leasing activity is steady at a solid pace and a modest amount of build-to-suit construction activity is reported. In Providence, deal volume is steady in both the office and industrial leasing markets and office vacancy rates are expected to decline moving forward amid lack of construction activity. Also in Rhode Island, business sentiment is described as optimistic in the face of modest improvements in current economic conditions and passage of a state budget that is seen as favoring job creation. Hartford's office leasing volume slowed in recent weeks, prompting one contact to downgrade his outlook for that market; however, Connecticut's investment sales market remains quite strong. Bank lenders in greater Boston are reportedly offering very low interest rates and generous terms for commercial real estate mortgages and construction loans. A common concern among contacts in the First District is the potential impact on investment demand for commercial properties once short-term interest rates start to rise.\nResidential Real Estate\nHomebuyer confidence is up across the First District, according to contacts. Accordingly, completed sales of single-family homes increased over-the-year to May 2015 in every state except Massachusetts, which posted a decline in completed sales for the same period. The decline in Massachusetts' completed sales is attributed in part to the state's long and harsh winter, which deterred foot traffic even into April. Record-low inventory levels in Massachusetts are reportedly causing changes in the contracting environment, such as an increased willingness of sellers to let buyers out of pending sales contracts and a trend of sellers' making a sale contingent on their finding a new home to purchase. Over-the-year to May 2015, supply of single-family homes decreased in every state in the First District while pending sales increased. Median Sales Price (MSP) of single-family homes increased over-the-year in four of six New England states, while in Connecticut MSP is flat and in Massachusetts MSP decreased. The latest decline in MSP is only the second for Massachusetts in 31 months and contacts insist that buyer demand remains strong. The condominium market saw mixed results. Completed condominium sales are down in Massachusetts, Connecticut, and Vermont and up in Rhode Island, New Hampshire and Maine. MSP for condos increased in all states except Vermont and Maine. Massachusetts currently has only 1.8 months' supply of condominiums available, compared with 6 to 7 months' supply in a balanced market. Condominium inventory is down and pending condo sales are up in all six states. Contacts are generally optimistic about regional demand for residential real estate moving forward, despite voicing some uncertainty about the impact of eventual increases in interest rates.\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 15, 2015\nThe Tenth District economy increased modestly in June, and contacts in most industries anticipated stronger growth in the months ahead. Consumer spending activity expanded at a moderate pace with retail, restaurant, tourism and auto contacts reporting higher sales since the last survey. Contacts in the manufacturing and energy sectors noted a decline in overall activity, however their expectations for the coming months improved since the previous survey period. Transportation firms also reported a slight decline in sales, but activity in the professional, high-tech, and wholesale trade sectors continued to increase. Real estate activity continued to rise at a modest pace in June, and commercial and residential construction activity was expected to accelerate at a moderate pace in the coming months. Most bankers reported stable overall loan demand, loan quality and deposit levels. Heavy rain in late May led to a decline in expectations for the winter agricultural harvest, but soil moisture improved for developing crop and pastures. Prices continued to rise slightly in the majority of industries, and wages grew modestly.\nConsumer Spending\nConsumer spending activity rose moderately and remained higher than a year ago, with mostly solid expectations heading forward. Retail sales increased moderately in June and were above year-ago levels. Several retailers noted an increase in sales for building materials and summer-related products, while sales of home furnishings were weak. Expectations for future sales remained strong, and inventory levels were expected to rise slightly. Auto sales continued to increase modestly and were slightly higher than last year, with further gains expected in the months ahead. Dealer contacts noted particularly strong sales of larger vehicles such as trucks and SUVs. Auto inventories increased, and most contacts expected inventory levels to continue to rise. Restaurant sales improved considerably compared to the previous survey and year-ago levels, and additional gains were anticipated in the coming months. District tourism activity strengthened moderately in June but was lower than last year.\nManufacturing and Other Business Activity\nManufacturing activity continued to decline in June but at a slightly slower pace than during the previous survey period, while other business activity was mixed. Manufacturing production contracted further, although producers' expectations for future activity were positive and slightly higher than the previous survey. Durable goods manufacturing declined, but at a more gradual pace than in the previous survey period. Nondurable goods production also fell further across most subsectors, and at a somewhat faster pace of decline than in the previous survey. Production declined in all District states except for Colorado, but continued to be weakest in energy-concentrated Oklahoma. Manufacturers' capital spending plans increased to their highest level in five months. Transportation firms reported a decline in activity since the previous survey, although sales were modestly higher than a year ago and expectations were positive heading forward. Professional, high-tech, and wholesale trade contacts reported increased sales but at a slower pace than the previous survey. Firms expected activity to rise moderately in the months ahead. Most transportation, wholesale trade, professional, and high-tech businesses reported solid capital spending plans.\nReal Estate and Construction\nReal estate activity continued to increase at a modest pace in June, and contacts expected activity to expand at a faster pace over the coming months. Residential real estate sales rose modestly since the previous survey period and were above year-ago levels. Sales of low- and medium-priced homes continued to outpace sales of higher-priced homes. Home prices continued to make strong gains, and inventories fell further. Expectations for sales and prices were strong, and inventories were expected to decline modestly. Residential construction and related business activity expanded as new housing starts and construction supply activity increased at a modest pace, and contacts anticipated a moderate rise over the coming months. Commercial real estate activity continued to expand at a modest pace in June as vacancy rates decreased and absorption rates, completions, construction underway, sales and prices increased. The commercial real estate market was expected to strengthen moderately over the months ahead.\nBanking\nBankers predominately reported stable loan demand, loan quality, and deposit levels since the last survey period. Respondents indicated a steady demand for commercial and industrial, commercial real estate, residential real estate, and consumer installment loans, with fewer bankers indicating an increase in these categories compared to the last survey. Demand for agricultural loans was primarily split between increased and steady demand. Most bankers indicated loan quality was unchanged compared to a year ago. In addition, most respondents expected loan quality to remain the same over the next six months. Credit standards remained largely unchanged in all major loan categories, and most respondents reported steady deposit levels.\nEnergy\nEnergy activity continued to decline in June, but expectations for the coming months improved considerably despite continuing concern about the volatility in oil prices. Compared to the last survey period, the number of active oil drilling rigs fell modestly through June, primarily in Oklahoma, and drilling activity declined, but at a slower pace. Steady withdrawals of crude oil inventories continued in Cushing, Oklahoma, as seasonal demand for petroleum products picked up and refinery utilization rates rose. Oil prices reached the highest levels of the year in mid-June, but struggled to maintain those levels through the end of the month. Most respondents expected oil prices to increase somewhat in the coming months primarily as a result of slowing U.S. production. Slowing natural gas production growth and higher energy demands due to warmer weather reduced oversupply and supported natural gas prices.\nAgriculture\nDistrict agricultural production expectations declined slightly since the last survey. Heavy storms in late May reduced expectations for the winter wheat harvest in Kansas and Oklahoma and also delayed soybean planting progress throughout the Tenth District. However, the substantial rainfall generally improved soil moisture for developing crops and pastures, and over half of the corn crop in Nebraska, Missouri, and Kansas was in good or excellent condition. With reduced production expectations, the price of hard red winter wheat rose modestly in June, and corn and soybean prices also increased slightly. In the livestock sector, beef cattle production through May was slightly lower than last year, holding cattle prices near historically high levels. Conversely, hog production over the same period grew modestly, placing downward pressure on hog and retail pork prices.\nWages and Prices\nPrices continued to rise slightly in the majority of industries, and wages grew modestly. Retail input and selling prices grew at a faster pace in June, and input prices were expected to rise further in the months ahead. Restaurant menu prices also rose at a faster pace than the previous survey. Manufacturing finished goods prices experienced a slight decline despite a modest increase in raw materials prices. Transportation input prices increased slightly, but output prices fell modestly. Construction prices grew modestly, and contacts anticipated additional increases in the near future. Wages in the retail and restaurant sectors rose at a faster rate than the previous month. Transportation wages rose slightly and were expected to continue to rise in the coming months. Respondents noted difficulty finding truck drivers, IT developers, skilled technicians and some entry-level positions.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Philadelphia

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"Beige Book Report: Philadelphia\nJuly 15, 2015\nAggregate business activity in the Third District continued to grow at a modest pace during this current Beige Book period. Contacts continued to report modest growth in hiring and only slight increases in wages; price increases also remained relatively slight, with most contacts reporting little change. Moderate growth of economic activity is anticipated over the next six months.\nAcross sectors, general service-sector firms continued to report a moderate pace of growth; however, staffing firms indicated a somewhat more modest pace this period. Tourism contacts reported modest growth compared with a strong year-ago season, while auto dealers reported relatively flat sales against their record highs from the spring of 2014. Overall, nonauto retail sales continued to grow modestly, although contacts offered mixed reports. On balance, lending volumes also continued to grow at a modest pace. Manufacturing resumed a modest pace of growth, and nonresidential construction and leasing continued at a modest pace. Homebuilders reported little or no change in activity. Existing home sales reports were mixed, but this was against a backdrop of weak growth in the spring of 2014. Home prices continued to rise slightly.\nManufacturing\nThird District manufacturers reported that overall activity picked up to a modest pace of growth during the latest Beige Book period. Contacts reported similar improvements in new orders and in shipments. Gains in activity appeared to be stronger among the makers of paper products, chemical products, rubber and plastic products, industrial machinery, and fabricated metal products; activity appeared weaker among the makers of food products, primary metal products, and electronics. Slightly more than half of the contacts indicated that underlying demand for their products had increased over the past three months, while one-fifth reported no change.\nExpectations of business activity growth during the next six months, particularly for new orders and shipments, have improved somewhat since the last Beige Book report. However, firms indicated little change in their expectations of future employment while softening plans for future capital expenditures.\nRetail\nRetail sales rose moderately, but the reports were mixed. Contacts reported record sales at convenience store locations, moderate sales growth at area malls, but only modest growth at outlet stores. Convenience stores that sell gasoline continue to report stronger sales of nonfuel items due, in part, to the ongoing, relatively low price of gas. Contacts continued to state that customers remain value driven. A convenience store contact indicated that the very strong sales in May bode well for the stores' summer season. Generally, contacts continued to expect modest growth throughout 2015.\nAuto dealers reported strong sales in May. However, compared with last year when sales were hitting record-high levels, growth has been reported as flat or down. June sales are also expected to remain strong but may also not exceed last year's robust pace. Auto dealers remained optimistic for continued strong sales in 2015, although outperforming 2014 may be in doubt.\nFinance\nThird District financial firms have continued to report modest overall increases in total loan volume since the previous Beige Book. Strong growth was reported for commercial and industrial lending and auto loans, while most real estate lending and other loans were relatively flat. Generally, banking contacts described a slow, steady pick-up in activity and remained optimistic for the remainder of the year.\nReal Estate and Construction\nThird District homebuilders have reported little or no change in activity since the last Beige Book. Contacts reported that economic and financial conditions remained challenging for contract signings on new homes. Activity remained inconsistent through the current time period. However, surviving smaller builders are generally meeting their plans and expect this year to be as good as, if not better than, last year. Brokers in the Philadelphia and Harrisburg areas reported continued year-over-year gains in home sales; however, the prior spring had been relatively weak. The Lehigh Valley and southern Jersey Shore markets reported decreases despite comparison with last year's weak sales. Home prices continued to rise slightly. Neighborhoods in and around Philadelphia's Center City remain a \"hot spot,\" with greater demand, more sales, and stronger price gains.\nNonresidential real estate contacts reported little change to the modest pace of construction and leasing activity seen earlier. Downtown Allentown and Philadelphia remain the focus of significant new construction for office and mixed-use developments. While most of the new office demand stems from firms moving around the region, contacts suggest that some demand is being driven by employment growth from existing firms and from new locations by out-of-market firms. Overall, commercial rents continued to increase slightly. Contacts generally remained optimistic for the ongoing growth of both new construction and leasing activity in 2015.\nServices\nOverall, Third District service-sector firms have continued to report moderate growth in activity since the previous Beige Book, and they remain even more optimistic about the next six months. More than one-third of the firms reported increases in employment--a higher percentage than the prior period. In contrast, contacts at staffing firms generally indicated that their activity had been somewhat slower and that their clients have been slow to make decisions to place orders and to hire recommended job placements. Trucking activity continued to show signs of weakness from the underlying economy, according to a transportation services analyst; however, the Third District remains a dominant location for warehouse distribution centers. Tourism contacts at shore destinations reported record levels of activity in Delaware and New Jersey--representing a modest improvement over a strong 2014. Early reports also suggest that tourists may be spending more, with high-end restaurants booking up on many nights. Atlantic City casino activity remains an exception, with the total take continuing its years-long slide unabated.\nPrices and Wages\nThe overall price level has continued to increase slightly since the previous Beige Book period. About half of the nonmanufacturing contacts and three-fourths of the manufacturing contacts reported little or no change in the prices they pay for inputs and the prices received for their goods and services. Over one-third of the nonmanufacturing contacts reported increases. Among manufacturers, contacts reporting increases outnumbered those reporting decreases--a reversal from the prior period. Generally, contacts reported little change in wage pressures; some highly skilled and technical positions continue to be difficult to fill.\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 15, 2015\nThe Eleventh District economy grew at a moderate pace over the past six weeks. Manufacturers mostly reported steady or weaker demand. Retail sales increased and auto sales were generally strong. Demand for nonfinancial services held steady or improved, and real estate activity generally remained solid. Loan demand rose slightly, and demand for oil field services held steady. Continued rainfall further improved agricultural conditions. Price pressures remained subdued and employment held steady or increased. Outlooks were mostly positive, except in the energy sector where they were negative.\nPrices\nPrices generally held steady or declined. Staffing firms noted downward pressure on fees from clients, and an airline reported lower fuel surcharges and airfares. Most manufacturers noted no change in selling prices, except for cement and fabricated metal manufacturing firms, which reported lower selling prices due to increased competition, particularly from imports. Chicken prices declined rapidly as a result of an outbreak of avian flu outside the district, but egg prices have skyrocketed according to contacts. A trucking firm said rates were up due to tight capacity, and contacts in food services noted higher input costs and plans to raise prices in the fourth quarter.\nOil and natural gas prices were relatively stable compared to the prior reporting period. The price of on-highway diesel edged down, while retail gasoline ticked up seasonally.\nLabor Market\nEmployment in most industries held steady or increased. Auto dealers and retailers noted job gains and said that filling open positions was somewhat easier in areas near the oil fields. Hiring was noted by some professional and technical, financial and food services firms. Construction contacts continue to report a tight labor market particularly for skilled trades, but one contact in Houston noted a decline in unskilled labor costs. Some fabricated metals and high-tech manufacturers reported layoffs. Some downsizing continues in the energy sector but massive layoff announcements are largely finished and contacts said the industry has weathered the downturn well so far.\nWages were mostly flat to up from six weeks ago. Continued upward wage pressures for truck drivers were reported, with one firm noting that salaries were up 10 percent year over year due to shortages. Two staffing firms said that employers were considering raising wages across the board to retain productive workers. Some primary metals manufacturers increased starting salaries in part due to skilled labor shortages and to keep up with pay raises at Walmart. Food services and petrochemicals contacts generally noted easing wage pressures.\nManufacturing\nMost manufacturers noted steady or weaker demand. Demand for construction-related materials was mixed. Cement producers said demand fell over the reporting period, which they attributed largely to the effects of wet weather on construction activity, although one contact cited the slowdown in oil filed activity as a factor as well. Brick and lumber manufacturers saw a slight uptick in orders since the prior report, still demand remained below year-ago levels. Demand for primary metals held steady or fell since the last report, with one manufacturer noting a 20 percent year-over-year decline in orders in the second quarter. Fabricated metals producers noted improved demand.\nDemand for high-tech manufacturing weakened during the reporting period, and contacts said revenue growth so far in the second quarter has been lower than projected. Weakness continued to stem from slowing in sales of personal electronics devices, particularly PCs, and communications infrastructure equipment. Outlooks were weaker than earlier in the year. Demand for transportation equipment manufacturing was mixed over the past six weeks. Aerospace parts manufacturers reported steady to higher sales. A large automobile manufacturer noted increased demand for trucks, SUVs and minivans because of low fuel prices, while a recreational vehicle manufacturer noted declining sales. Food producers said demand was flat during the reporting period as well as compared to last year, with the exception of one contact who noted a sharp decline in sales.\nRefinery utilization rates remained strong. Domestic demand growth for gasoline was higher than expected, and refiners anticipate healthy year-over-year growth during the current summer driving season. Chemical producers said export demand remained weak because of the strong dollar, and domestic demand was sluggish because of weakness in industrial production and the effects of weather on construction activity in the first half of the year.\nRetail Sales\nRetail sales increased over the reporting period. Retailers reported strong Mother's Day-related sales but said that activity weakened somewhat after that. Softer growth in sales was attributed to the wet weather and the strong dollar, which has reduced sales especially along the border. Two national retailers said Texas sales underperformed the national average, while a third national retailer said Texas was in-line with the nation and a fourth said Texas outperformed the U.S. average. Contacts expect continued sales growth and outlooks were mostly optimistic.\nAutomobile sales remained strong and demand was up year-over-year. A few contacts noted slightly low vehicle inventories, and outlooks for the remainder of the year were optimistic.\nNonfinancial Services\nMost nonfinancial services firms reported demand was flat or up from six weeks ago, and outlooks were optimistic. Demand for staffing services was flat to up since the last report. Staffing needs were particularly strong in the professional, healthcare, and financial services sectors, although one contact said demand from all non-oil and gas sectors was solid and that orders from the energy sector had stopped declining as well. Demand for professional and technical services increased modestly in the past six weeks. Accounting firms noted a healthy pipeline of work, including more activity in mergers and acquisitions among oil and gas related firms. Law firms saw a small pick-up in demand for litigation and strong growth in real estate, financial and corporate transactional practices; however, demand continued to soften for energy related projects. A consulting firm reported robust demand and growing international interest in commercial real estate deals in Texas, while a technical services firm noted steady demand.\nSea cargo shipments fell from April to May, but were up notably year to date. Trucking cargo volumes held steady during the reporting period, and contacts said they expect strong demand in the third quarter. Airlines reported a seasonal increase in passenger demand over the past six weeks. Domestic and transatlantic demand remained strong, while travel to South America, particularly Brazil and Venezuela, continued to be weak. Contacts in the restaurant and food services industry said demand grew at a modest pace. Demand was up moderately in the large metro areas but flat to down in smaller rural markets.\nConstruction and Real Estate\nReports on home sales and buyer traffic were mixed, but outlooks were unanimously positive. Contacts noting slower activity mostly attributed it to wet weather across much of the state. Lot deliveries and new home starts have been significantly delayed due to the rains, resulting in large backlogs and prompting a few builders to limit sales. Contacts expect to see a surge in starts in the second half. Apartment demand was generally robust, rent growth solid and occupancy high, despite elevated construction levels. Dallas-Fort Worth was the strongest market, but San Antonio saw notable improvement as well. While demand and rent growth in Houston remains strong there is some softness in rental rates for Class A product and in construction starts.\nCommercial real estate activity generally held steady, and outlooks remained cautiously optimistic. Demand for office space was solid in Dallas-Fort Worth, while contacts in Houston noted slowing in leasing activity and further increases in the level of sublease space. Industrial leasing remained active in both metros; characterized by low vacancy, rising rents and high levels of construction. Retail demand was strong, and retail construction in Dallas-Fort Worth is at a three-year high.\nFinancial Services\nLoan demand ticked up over the past six weeks. Both commercial real estate and commercial and industrial loan growth remained positive, but slowed somewhat since the last report. Contacts said loans to medium-sized businesses remained virtually unchanged although lending to auto dealers and retail stores grew at a slightly faster pace. Deposit volumes rose slower than expected at consumer lending based banks, while deposits at business lending based banks continued to increase at a moderate pace. Loan standards were nearly unchanged, and loan quality remained strong. Outlooks improved slightly since the last report.\nEnergy\nDemand for oil field services was largely flat, and the rig count fell slightly over the reporting period. Industry costs declined further, but contacts said decisions to make further cuts to capital spending still loom as firms reassessed their positions. Many firms have managed to secure funding and are generally not distressed, however, as hedge positions begin to roll off in the fall and borrowing bases are reevaluated, merger and acquisition activity may surge. Small service providers continued to be more distressed as they have less negotiating power for cutting costs and greater difficulty accessing global capital markets.\nAgriculture\nContinued rainfall caused some localized flooding, but overall it improved growing conditions and spurred the district out of a long drought. There was enough of a break in the wet weather for most producers to catch up on wheat harvesting and planting of cotton and grain crops. The cotton crop is off to a good start, and above-average grain production is expected. Pasture conditions were better than they have been in several years, and cattle producers continued to benefit from high prices.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Atlanta

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"Beige Book Report: Atlanta\nJuly 15, 2015\nReports from Sixth District business contacts indicated that economic activity expanded at a moderate pace from mid-May through June. The outlook among businesses remained positive as most anticipate higher growth in the near term.\nDistrict merchants noted a modest improvement in sales activity since the previous report. Vehicles sales remained strong. The tourism sector continued to experience solid activity. Reports from residential brokers and builders indicated home sales increased from year earlier levels. Real estate contacts also noted that home prices modestly appreciated since the previous report. Commercial real estate contacts continued to cite improved demand for properties and construction increased from a year ago. Overall, manufacturing activity continued to expand. Bankers noted increased loan demand. District firms reported continued tightness in the labor market. On balance, businesses reported subdued wage and input cost pressures.\nConsumer Spending and Tourism\nSome District retailers indicated a slight rebound in sales from the weather- and West Coast port-disruptions experienced earlier this year. Apparel and general merchandise retailers noted the pace of sales growth was, at best, slow year-over-year. Expectations are for improved activity as the next major holiday falls on a weekend. Auto sales continued to experience robust sales activity.\nOn balance, travel and tourism contacts continued to report positive activity from mid-May through June. Contacts in Georgia, Florida, and Louisiana reported strong occupancy numbers and an increase in consumer spending from a year ago. Year-to-date Mississippi casino gaming revenues increased compared with the same period last year. Advanced bookings in the hotel and conference segments were noted as being strong for the summer season.\nReal Estate and Construction\nMost residential brokers indicated that home sales met or exceeded their plan from mid-May through June. More than half of contacts reported that home sales had increased from the year earlier level. The majority of brokers indicated that inventory levels had remained the same or fallen from the prior year's level. Further, most contacts noted that buyer traffic was up compared with a year earlier. Brokers continued to report modest home price appreciation, and noted that they expect home sales activity to increase slightly over the next three months.\nThe majority of homebuilders indicated that construction activity was up from the year-ago level. New home sales activity and buyer traffic was also described as being slightly up from a year earlier. Many builders indicated that the inventory of unsold homes remained unchanged from a year earlier. Most builders reported some degree of home price appreciation. The outlook among builders for new home sales and construction activity over the next three months remains positive.\nDistrict commercial real estate brokers indicated that demand continued to improve for all property types, but cautioned that the rate of improvement varied by metropolitan area, submarket, and property type. Commercial contractors indicated that nonresidential construction activity had increased from the year-ago level. Many contacts continued to report that apartment construction remained robust. Most contacts reported a backlog that was greater than the previous year. The outlook among District commercial real estate contacts remains positive.\nManufacturing and Transportation\nManufacturers indicated that overall activity expanded from the previous reporting period, even though decreases in new orders and production were observed. Employment levels at factories continued to rise, while supplier delivery times increased and finished inventory levels were slightly elevated. Similar to the previous report, less than half of contacts expect an increase in production levels over the next three to six months.\nDistrict transportation contacts reported that activity moderated from mid-May through June. Logistics contacts reported a slowdown in freight. Year-to-date railroad volumes were flat, though year-over-year increases were noted in the movement of petroleum products and metallic ores. Shipments of iron and steel scrap and primary forest products were down notably. Domestic activity for maritime shipping companies slowed as shipments of coal and steel related to energy production deteriorated. Air cargo contacts continued to note a decline in overall tonnage. Freight volumes at District ports, however, remained robust with double-digit increases in break bulk cargoes and container trade.\nBanking and Finance\nBanking contacts continued to report that credit was readily available for qualified borrowers. Competition for loans remained elevated as private equity firms and individual lenders competed in the same lending arena traditionally occupied by banks. Lenders reported increased mortgage refinancing as rates dipped and home equity levels continued to improve. Auto lending remained strong. Bankers in Louisiana continued to report a slowdown in lending tied to the energy sector.\nEmployment and Prices\nBusinesses continued to report that the labor market was tightening. Competition for workers led to increased turnover, mostly for mid- and higher-level positions. Contacts also noted that it was more difficult to retain employees. Firms continued to invest in technology and human capital to improve productivity. The outlook for employment remained positive in most sectors outside of energy, where contacts indicated they implemented labor cutbacks including layoffs, worker hour reductions, and reduced wages.\nThe majority of contacts continued to budget staff-wide wage increases of between 2 and 3 percent for the coming year. The rising pressure to retain high-value staff continued to put upward pressure on labor costs for high-demand workers. Firms reported using both traditional wage increases and additional channels, such as increased paid time off or bonus opportunities to help retain and attract staff. Businesses cited subdued input cost pressure and modest success passing on price increases, with the exception of retailers, who continued to face strong pressure to keep prices in check. According to the Atlanta Fed's survey of business contacts, year-over-year unit costs were up 1.4 percent in June, the lowest reading since October 2012. Restrained costs across a number of commodities, combined with strength in the dollar, supported higher margins for businesses that consume or purchase substantial quantities of commodities or imported goods.\nNatural Resources and Agriculture\nFirms engaged in oil and gas production continued to curtail capital expenditures and focus on cost management and operational efficiency strategies. Contacts cited that these efforts resulted in labor cutbacks and reductions in soft and variable costs, which applied downward pressure on the rates charged by oilfield support service providers and suppliers. Where occurring, most new energy industry capital investment was concentrated in deepwater exploration and production and pipeline construction for crude oil transportation.\nParts of Alabama, Florida, Georgia, Mississippi, and Tennessee experienced drought conditions categorized from abnormally dry to some pockets of severe drought, the driest designations being in the southernmost tip of Florida and South Georgia. Soybean planting in Louisiana was on par with their five year average, while Mississippi and Tennessee were slightly behind. Cotton planting has been or is almost completed in Alabama, Georgia, Louisiana, Mississippi, and Tennessee and on par or slightly ahead of their five-year averages.\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 15, 2015\nEconomic conditions in the Fifth District strengthened moderately since the last Beige Book. Manufacturing activity increased, with a pickup in the volume of new orders and order backlogs. Retail sales strengthened, while non-retail revenues rose somewhat faster. Tourism moved into peak season with growth slightly above last year's seasonal increase. In finance, residential loan demand increased modestly since our previous report. Commercial loan demand strengthened moderately. In real estate markets, residential home sales improved. Commercial real estate leasing and purchasing also increased. Energy production was little changed overall. Labor demand increased for various categories of workers, and average wages moved higher.\nAccording to our most recent surveys, prices of manufacturing raw materials and finished goods rose at a slightly faster pace. Retail price growth slowed from the previous moderate pace, and non-retail price growth remained modest. Industry contacts reported that agricultural prices declined and energy prices were unchanged.\nManufacturing\nManufacturing activity increased moderately since our last report. Contacts reported a general pickup in the volume of new orders and an increase in order backlogs; shipments flattened, however. Some metals manufacturers (primary and fabricated) in North Carolina and South Carolina noted an uptick in demand resulting from strength in commercial construction and industrial infrastructure development. Several food manufacturers reported a strong peak season with higher production. However, a Virginia food manufacturer reported a decline in production due to higher egg prices. In addition, a Maryland machine manufacturer stated that sales and order backlogs decreased in recent weeks, and a North Carolina gasket manufacturer reported a broad-based slowdown in the volume of new orders. A West Virginia fabricated metal manufacturer reported that order volume flattened since the previous report. According to our most recent survey, prices of raw materials and finished goods rose at a slightly faster pace.\nPorts\nActivity at District ports picked up in recent weeks, with port officials reporting record volumes of loaded container shipments. In addition, very high volumes of light vehicles were moving through the ports. Growth in imports increasingly outpaced growth in exports, and retailers have notified ports that they expect a strong peak season this year. Outgoing shipments of empty containers have risen sharply at one port, partly as a result of operational incentives. New construction at port locations rose, notably for manufacturing.\nRetail\nRetail sales growth strengthened since the prior Beige Book, with grocers, building materials suppliers, and home and garden merchants reporting an acceleration in sales. A Virginia discount store manager said total receipts were up slightly despite a decline in customer traffic. Sales of cars and light trucks varied, with larger dealers continuing to describe robust growth in sales. However a large motorcycle dealer said the peak season has started but sales have declined by double digits. According to our most recent survey, retail prices rose at a slower pace in recent weeks.\nServices\nNon-retail services firms reported moderately faster growth in revenues since our last report. National trucking firms located in the Fifth District had slightly faster growth, although some of the strength was attributed to gains in market share. Professional, scientific, and technical firms reported continued revenue strength. Executives at healthcare systems described steady to stronger demand. A financial services executive in Virginia stated that business was \"slowly inching up,\" while a West Virginia CPA firm had no change in customer demand. Services prices continued to rise at a modest pace.\nThe peak season for tourist activity began on a slightly stronger note this year. Contacts in North Carolina representing the mountainous areas and the Outer Banks, said that bookings were up compared to a year ago as the summer season got underway. A similar report was shared by an executive at a resort in Virginia, who also noted particular strength in online advance bookings. The Outer Banks executive added that tourists were spending more money in local shops and restaurants, even though higher food costs have pushed up menu prices. The improvement was not universal, however. A hotel executive near a military base reported that demand had softened. There were few reports of room rate changes.\nFinance\nLoan demand strengthened since our previous Beige Book. On the residential side, a banker in North Carolina said that lending improved, but noted that an above-average portion of activity was coming from investors, causing home prices to rise. A lender in Maryland reported that loan growth was \"healthy,\" although net interest margins were shrinking. Commercial loan demand increased moderately across most of the District. Lenders in North Carolina and Virginia reported greater demand and growing pipelines for commercial loans, but added that regulations and excessive paperwork were delaying loan closings. A lender in West Virginia, however, said that demand for commercial loans was tepid. Reports on credit standards were mixed. The West Virginia lender reported some tightening for commercial loans. He added that guarantees and historical relationships had little influence on underwriting decisions. Conversely, lenders in Maryland, Virginia, and North Carolina said that competition for loans was leading to aggressive pricing, loan structures, and covenant-type lending. Credit quality was largely reported as stable with some slight declines in rural areas. Deposit growth increased in Maryland (particularly for small businesses) and West Virginia. Interest rates moved slightly higher, according to contacts in North Carolina and West Virginia.\nReal Estate\nDistrict housing market activity continued to increase at a moderate pace since the previous report. Realtors reported steady buyer traffic in the past six weeks, but expect a typical seasonal slowdown heading into the summer vacation months. Average sale prices rose slightly in several markets, while days on the market varied. Housing inventories remained low across the District. A broker in Greensboro, North Carolina stated that sales were very strong and he expects continued strength through August, but that inventory remains low. Additionally, a business contact in Charlotte, North Carolina reported strong demand for new homes, with short supply. A Realtor in Baltimore reported an active market for homes below $500,000, noting that properties in excellent condition sell quickly. Residential construction reports were mixed. Multifamily leasing and construction activity remained strong, with continued increases in rental rates.\nCommercial real estate activity increased modestly overall since the previous report, with a pickup in activity in the industrial sector and reports of slower growth in the office sector. Vacancy rates and rental rates varied across submarket and region. A business contact in Baltimore reported increased demand for industrial space since the previous report, and a Columbia, South Carolina broker reported a very active class B warehouse market. A Realtor in Columbia, South Carolina reported a surge of retailers looking for land sites, noting accelerating land prices and limited supply. A Greensboro, North Carolina source said the office market was soft, with an abundant supply of class B and class A space. In contrast, a Columbia, South Carolina Realtor reported a shortage of office space. Brokers in the District of Columbia and in Maryland reported a slight increase in the demand for office space, and said that that concessions had tightened up somewhat. A Richmond broker said that sales are \"rolling in\" and there are a lot of properties under contract right now. An hotelier in western North Carolina stated that there were several new hotels under construction and in the pipeline in the mountains of North Carolina. A Realtor in the District of Columbia reported softer commercial sales since the previous report. Commercial construction increased slightly in Richmond; Asheville, North Carolina; and in Columbia, South Carolina.\nAgriculture and Natural Resources\nAgriculture contacts reported modestly stronger business conditions since our last report. Growers said that seasonal planting of corn, soybeans, and cotton is nearly over. A farmer in western Virginia reported large yields of hay and higher hay prices. Sales of his other agricultural products declined, however. A nursery executive in Virginia Beach stated that sales flattened seasonally. A farmer in North Carolina reported he had replanted crops that had been damaged by dry weather. However some farmers had to destroy crops due to extremely low yields, with insufficient time to replant. Since the previous report, commodity prices remained low, with the exception of hay prices. Input prices increased slightly.\nNatural gas production was unchanged overall since our previous report, while prices declined slightly. Coal production continued to decline and prices were unchanged.\nLabor\nSince our previous report, the demand for labor increased moderately for many skill sets, including entry level, semi-skilled, and highly skilled. Shortages were reported for warehouse workers, forklift operators, construction workers, health care technicians, engineers, chefs, managers, biotech and IT professionals, and especially cybersecurity specialists. A staffing agent in Virginia noted difficulty finding warehouse workers and laborers who could pass background checks and drug tests. Temporary workers were becoming permanent employees at a slightly faster rate. An executive at an online agency stated that many job seekers were already employed and looking for a better, higher paying job. Wage increases were reported for some hospitality workers, architects, health care technicians, and textile workers. However, several sources said that merit-based bonuses and other benefits, rather than wage increases, were being used to compensate employees. According to our most recent surveys, employment in the service sector expanded at a slightly slower pace while manufacturing employment grew marginally faster; average wages rose for both service sector and manufacturing employees.\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 15, 2015\nBusiness contacts in the Fourth District reported a steady level of activity over the period, with little change in the pace of growth. Reports by industry sector were mixed. Production at manufacturing plants contracted slightly. Nonresidential building contractors characterized their backlogs as strong; the housing industry saw a pickup in construction starts and purchases of new and existing single-family homes. Sales at stores and restaurants were marginally higher than those of a year ago, while new-car sales fell slightly year over year. Drilling in the Marcellus and Utica Shales declined further. Reports on freight volume were mixed. The demand for business and consumer credit continued to move slowly higher.\nPayrolls expanded slightly. Staffing firms reported a pickup in the number of job openings in healthcare and manufacturing; however, placements did not keep pace. Upward pressure on wages is limited mainly to technically-skilled personnel. Overall, input and finished-goods prices were steady. We heard reports about declines in prices for steel and some petroleum-based products.\nManufacturing\nFactory contacts reported that overall demand contracted slightly over the period. Key factors tempering output include a strong dollar and the downturn in the oil and gas industry. That said, suppliers to the aerospace, motor vehicle, and construction industries continue to see strong or strengthening demand. Compared to that of a year ago, demand has strengthened to some extent by a pickup in the construction sector. The outlook for the second half of 2015 varied widely. The steel industry continues to experience stiff competition from imports, competition driven in part by the strong dollar. As a result, steel shipments fell more than expected over the period; industry utilization rates declined and now stand about 10 percent below normal. Demand for steel from the auto and construction industries is still relatively strong. Year-to-date auto production at District assembly plants through May fell 3 percent below the prior year's level. This fall may be because of a sharp year-over-year decline in motor vehicle exports from domestic plants, a situation attributable to dollar appreciation.\nOn balance, capital budgets increased slightly over the period, mainly to take advantage of unforeseen opportunities. Spending was primarily for equipment (machinery and IT) and maintenance projects. Raw material prices were flat or lower. Contacts cited price reductions for steel and petroleum-based products. Final-goods prices were stable. Reports indicated a modest expansion in payrolls, mostly for general labor. Wage pressure was limited to high-skilled jobs.\nReal Estate and Construction\nYear-to-date sales through May of new and existing single-family homes were moderately higher as compared to those of the same time period in 2014. The average sales price rose about 6 percent. Single-family construction starts picked up across most regions of the District over the period. New-home contracts remain concentrated in the move-up price point categories. Prices are trending higher because of rising labor costs, more stringent building codes, and higher land development costs. Several builders commented that the market for spec homes exists, but is limited by supply side factors, including capacity constraints and difficulty obtaining construction financing. Despite this difficulty, homebuilders remain optimistic about industry prospects for the remainder of the year.\nNonresidential contractors reported continued strong activity over the period, with revenues rising above year-ago levels. The number of inquiries has expanded to the point that general contractors are becoming more selective when bidding. Backlogs were described as strong or strengthening. Several contacts mentioned that their backlogs are at the highest level since prior to the recession, with work booked one to three years out. Demand is greatest for commercial building, healthcare facilities, office space, industrial structures, and multifamily housing (including senior living). Financing is more readily available to successful developers than it has been in the recent past. Banks and non-bank lenders are becoming more proactive in working with developers.\nCapital spending by general contractors was mainly for new equipment. Materials prices were stable during the past six weeks. Over the course of the year, builders anticipate that material prices will increase by about 3 to 5 percent, primarily for concrete and drywall. General contracting payrolls increased at a modest pace, mainly for field laborers and craft workers. The construction industry remains challenged by a labor shortage, though carpenters and drywallers are the most difficult to find. As a result, firms are attempting to boost participation in apprenticeship and co-op programs, with mixed results. Reports indicate continued wage pressure for the skilled trades.\nConsumer Spending\nGeneral merchandise retailers reported that their revenues were flat over the period. Athletic apparel and home furnishings (including electronics) were in highest demand. Restaurateurs experienced an increase in customer visits, an increase which they attributed to lower gasoline prices and heightened promotional activity. Retailers and restaurateurs stated that revenues were marginally better than they were a year ago, and third-quarter sales are expected to be higher than those of last year. Vendor and shelf prices were stable. Hiring is limited to new store openings. Announcements of wage increases by some large chains are providing the impetus to raise compensation levels across the industry in order to remain competitive. One chain noted that its employees are more enthusiastic and turnover is lower as a result of an increase in the hourly wage rate. Another contact said that retail employees will readily change jobs for an additional 10 cents per hour. Capital spending remains on plan for the fiscal year. Expenditures were mainly for remodeling and new store construction.\nYear-to-date sales of new motor vehicles through May were slightly below those of a year ago. A strong consumer preference for SUVs and light trucks continued. OEMs and dealers are reportedly increasing incentives on small cars. New inventory is close to matching demand, except for SUVs, where inventory is light. Looking forward, dealers expect unit volume will be on par with that of 2014; however, some voiced concern about the impact of potential interest rate increases. Year-to-date pre-owned vehicle sales are moderately higher compared to those of last year. Dealers are hiring for seasonal sales positions. Skilled service technicians are difficult to attract, a situation which is putting upward pressure on wages.\nBanking\nBankers reported that rising confidence in the economy as a whole is not reflected in the pace of growth of their business loan portfolios. This situation was attributed to mounting competition from nonbank lenders and the regulatory environment. CRE lending is growing at a faster rate than C&I lending. The pipeline for M&A financing is strong. Consumer credit continues to expand at a moderate pace, mainly for auto loans and home equity products. Some pickup in installment loans was noted. Interest rates for business and consumer credit were stable. Almost all of our contacts noted a seasonal increase in their residential mortgage business, which was heavily weighted toward new-home purchases. The rapid rise in rental rates was cited as a motivating factor to purchase homes. Little change was reported in delinquencies (already at low levels) and loan-application standards. Core deposit balances remain strong. Capital investment by banks was primarily for technology and acquiring community banks. Payrolls increased on net. Most hires were commercial lenders and risk managers. The number of bank branches continued to trend lower.\nEnergy\nLittle change in District coal production was reported over the period. Some reduction is anticipated going forward because of decreased demand. Spot prices for steam and metallurgical coal declined. The number of drilling rigs operating in the Marcellus and Utica Shales trended lower over the period and is now 34 percent below its peak level in the fourth quarter of last year. Natural gas production through the first quarter of 2015 was at a higher rate compared to that of the same period a year ago. Wellhead prices for oil are trending slowly higher, while natural gas prices have stabilized at a low level. Capital budgets held steady or were adjusted downward. Spending is mainly for maintenance projects and equipment. Employment-reduction plans put into effect earlier in the year have been completed. Any new hires are for replacement. Reports indicated some additional cuts in wages and benefits.\nFreight Transportation\nReports on freight volume were mixed. Contacts seeing increases attributed them to seasonal factors, higher demand for construction materials, and a dissipation of lingering effects of the West Coast port strikes. Softness in shipments of consumer products, including edibles, contributed to lower top-line growth. The outlook for the next few months is for volume to grow moderately along seasonal trends. Prices for fuel and maintenance items were fairly stable over the period. Fleets continue to replace older equipment aggressively. OEMs are currently working at capacity; tractor deliveries have reportedly lengthened to eight months. The labor shortage (drivers and service technicians) continued industry wide. Hiring over the period was more for replacement than to add capacity. One contact mentioned that in his segment of the industry, fleet owners are no longer attempting to expand labor capacity, but instead are seeking ways of operating more efficiently, including working cooperatively with competitors.\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 15, 2015\nGrowth in economic activity in the Seventh District was moderate in late May and June, with the pace of advance appearing to be a bit slower than during the previous reporting period. Consumer spending, business spending, and manufacturing production all grew at moderate rates, while construction and real estate activity increased modestly. Credit conditions were little changed. Cost pressures were also little changed, as prices for most raw materials remained low and wage growth remained limited. Wet weather reduced farmers' expectations for crop yields.\nConsumer Spending\nGrowth in consumer spending continued at a moderate pace. Retail sales slowed slightly in late May but then appeared to strengthen in June. Contacts reported a pickup in sales of apparel and outdoor sports equipment, while slower growth persisted in the food and beverage sector. The cool, rainy weather hurt sales of lawn and garden equipment, power equipment, and air conditioning units. High-end retailers continued to outperform lower-end stores. New and used vehicle sales strengthened further, leading dealers to revise up their expectations for sales in 2015. The strong demand also led to an increase in average transaction prices, particularly for used vehicles. The product mix continued to shift away from cars and toward trucks.\nBusiness Spending\nGrowth in business spending remained moderate. Most manufacturers and retailers reported comfortable inventory levels, though inventories remained elevated at steel service centers because of large volumes of imports earlier in the year and dealers' stocks of light trucks were lower than desired because of stronger-than-expected demand. The pace of capital spending was little changed, as were spending plans for the next six to twelve months. The majority of contacts reported that outlays were primarily to replace industrial and IT equipment, and spending for capacity expansion pulled back some. Several contacts in Illinois expressed concern that the state budget impasse was slowing business expansion and that non-profit service providers were particularly concerned about their future funding. Hiring and hiring plans were little changed. Labor demand was again strongest for skilled workers, particularly for many occupations in professional and technical areas, sales, and in skilled manufacturing and building trades.\nConstruction and Real Estate\nConstruction and real estate activity increased modestly over the reporting period. Most builders reported steady demand for residential units, and noted that new construction was primarily concentrated in urban areas. Home sales, home prices, and residential rents all increased modestly and contacts expected the slow pace of growth to continue over the next 12 months. Nonresidential construction activity also increased modestly, driven primarily by demand for industrial buildings. Commercial real estate activity increased moderately. Vacancies declined and the availability of sublease space ticked down.\nManufacturing\nManufacturing production continued to grow at a moderate pace in late May and June. Growth in the auto industry remained strong, while growth in most other manufacturing industries was more modest. Sales of heavy trucks rose steadily, while sales of heavy machinery changed little, with steady demand for construction machinery offset by weak demand for agricultural and mining equipment. Capacity utilization in the steel industry picked up some, but remained low, with demand growing more slowly than expected. Specialty metals manufacturers reported a steady pace of new orders, with stronger results for those primarily serving the auto industry and weaker bookings for those primarily serving the heavy machinery and oil and gas industries. Manufacturers of construction supplies again reported slow but steady growth.\nBanking and Finance\nCredit conditions were little changed over the reporting period. Financial market volatility was slightly higher, while credit spreads declined marginally. Business loan demand and pricing were flat. The commercial real estate market was an exception, with multiple contacts reporting growth and some expressing concern that the market was overheating. Consumer loan demand was little changed on balance. Mortgage and refinancing activity was steady. Contacts continued to report that competitive pricing for prime auto loans was leading to lower spreads as well as further expansion of sub-prime auto lending. The credit quality of borrowers continued to improve across loan categories and contacts reported that delinquencies were at a post-recession low.\nPrices and Costs\nOverall, cost pressures were subdued in late May and June. Energy prices remained low, as did prices of steel and other primary metals. Most retail prices changed little. On balance, food prices continued to decline, especially for pork and fresh produce, though beef and dairy prices increased some. Overall wage pressures were again modest, though they remained stronger for occupations where contacts were having difficulty filling openings. A staffing firm reported that wage growth picked up some, and that impending minimum wage increases would likely force their clients to further increase wages in order to maintain the premium that they pay in order to attract talent. Non-wage costs showed little movement.\nAgriculture\nWidespread rains saturated fields across much of the District, damaging crops and restricting fieldwork. Planting extended longer than normal and the emergence of soybeans was behind the five-year average. In contrast, corn planting finished and plants emerged before the rains hit. Corn, soybean, and wheat prices rose as yield expectations declined. High water levels on the Mississippi River stalled the loading and shipping of grain barges. Both higher feed costs and lower prices for hogs, milk, and cattle led to tighter margins for livestock producers. Egg prices remained elevated, as bird flu continued to hurt production. In addition to the large number of deaths, poultry houses were taking longer than expected to clean facilities and prepare for replacement birds.\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 15, 2015\nEconomic activity in the District grew at a moderate pace during the reporting period of late May through the beginning of July. Overall price inflation firmed a bit further, and upward wage pressures increased somewhat. Retail sales strengthened, while demand for business and consumer services grew further. Manufacturing activity was mixed but appeared flat overall. Agricultural output grew further. Real estate market activity continued to strengthen. Lending activity expanded further, spurred in part by growth in consumer lending.\nPrices and Wages\nOverall price inflation continued to firm somewhat. Generally strong demand in the hospitality sector prompted further increases in hotel rates. Rising prices for pharmaceuticals and increased health-care utilization associated with the aging population combined to put upward pressure on the overall cost of medical services. Prices for agricultural products were largely flat. However, the recent avian flu outbreak pushed poultry prices up, generating inflationary pressures in the restaurant sector more generally. By contrast, earlier energy price declines and dollar appreciation continued to put downward pressure on prices charged by utilities and prices of assorted raw material imports.\nUpward wage pressures intensified somewhat during the reporting period. Contacts in the information technology sector continued to report rapid wage gains for workers with specialized technical skills. In the construction sector, competition for skilled labor continued to grow, fueling substantial upward wage pressures; contacts also reported a rising incidence of contractors refusing assignments because the offered compensation was too low. Contacts in the hospitality and restaurant sectors reported increased competition for available workers and consequent wage increases; some areas expect additional upward wage pressures as higher minimum wages take effect over the next few years.\nRetail Trade and Services\nRetail sales strengthened. Contacts noted that low energy prices, a stronger job market, and improved household balance sheets boosted consumer demand in general. Automobile sales remained robust across the District. Demand for food and beverages strengthened somewhat, with some contacts reporting that spending shifted slightly away from generic labels toward higher priced brand-name products. Sales of electronic goods, particularly mobile phones, remained strong. Consumer confidence appeared to improve overall, and most contacts are optimistic about prospects for domestic consumer spending over the remainder of the year, although a few noted concerns that the elevated U.S. dollar could hamper export sales.\nDemand for business and consumer services grew further. Contacts in the hospitality industry reported strong demand but a slight deceleration in the pace of growth as the unexpected surge in past months due to the unusually warm winter dissipated. Activity in the technology services sector continued to expand at a solid clip, particularly for providers of internet security services. Demand for health insurance continued to grow, and contacts expect a further boost now that some legal uncertainties regarding coverage through the Affordable Care Act were resolved by the recent Supreme Court decision. Demand for legal services generally remained weak, and contacts reported continued excess availability of trained legal talent. Energy demand grew modestly but was restrained somewhat by the broader use of energy conservation measures by consumers.\nManufacturing\nActivity in the manufacturing sector was mixed across industries but flat overall. New orders of semiconductors increased over the reporting period, and inventories remained in line with demand. Contacts in the biotech and pharmaceutical manufacturing sector reported continued strong demand growth, and the continued availability of low-cost debt financing fueled consolidation among pharmaceutical firms seeking to enhance scale efficiencies. Deliveries of commercial aircraft increased, but new orders have fallen significantly compared with the first quarter, suggesting slower demand growth ahead. Contacts observed continued excess capacity and weak demand growth for wood products. Activity in the aerospace and defense sector expanded, but contacts expressed concern that a renewed debate over federal spending plans could constrain demand later this year.\nAgriculture and Resource-Related Industries\nAgricultural output grew further over the reporting period, but growth was uneven across sectors. High mortality rates from avian influenza dragged down the supply of poultry and pushed up prices. The overall supply of cattle remained low, as ranchers withheld them from markets to replenish herds. The supply of walnuts and almonds was held down by drought conditions in much of the District, and contacts observed that water-intensive crops more generally face a challenging outlook. Demand for forestry products remained flat as offshore demand slowed and domestic gains were somewhat limited.\nReal Estate and Construction\nReal estate activity expanded at a solid pace throughout the District. Contacts reported continued growth for residential and nonresidential construction and sales, with particularly rapid growth in metropolitan areas with large technology sectors. A few contacts noted a rising influx of foreign investment in commercial real estate, which drove up property prices in some metropolitan areas. Construction of residential units continued to show good growth in some areas, primarily for multifamily and rental properties. Sale prices reportedly have been rising for all types of residential properties, with an increasing incidence of bidding wars reported. Shortages of skilled labor remained a constraint on growth in construction activity in many parts of the District. Contacts expect that continued improvement in household wealth will spur further growth in residential real estate activity during the second half of the year.\nFinancial Institutions\nLending activity expanded further. Financial institutions across the District reported that loan-to-deposit ratios rose, and many contacts reported that lending growth was broad based for consumer, commercial, and real estate purposes. Commercial lending remained robust, due in part to the availability of continued low financing rates. Mortgage lending has grown steadily in recent months. Revolving credit for consumers expanded, but delinquencies remained modest. Bank deposits expanded and asset quality improved further, boosting bank liquidity. Sustained economic growth has reopened dormant revenue channels for some banks, as reflected in rising lending for mergers and acquisitions and gift and estate planning. Net interest margins widened somewhat, although large financial firms benefited more than small firms due to their scale advantages.\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 15, 2015\nPrepared at the Federal Reserve Bank of Atlanta and based on information collected before July 3, 2015. This document summarizes comments received from businesses and other contacts outside the Federal Reserve and is not a commentary on the views of Federal Reserve officials.\nAll twelve Federal Reserve Districts indicated that economic activity expanded from mid-May through June. Activity in New York, Philadelphia, and Kansas City grew at a modest pace, while Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Dallas, and San Francisco saw moderate growth. Compared with the previous report, growth remained steady in Cleveland, and Boston reported conditions were stable or improving. Boston, Philadelphia, Atlanta, Kansas City, and Dallas reported that contacts were optimistic about future growth, while Chicago and San Francisco cited optimism coming from specific sectors.\nImprovements in consumer spending varied by District. Some Districts indicated that low energy prices helped boost spending, while some border Districts noted weakness tied to the rising dollar. Automobile sales increased in almost all Districts. Tourism expanded in most regions, except New York where activity slowed.\nNonfinancial services experienced moderate growth since the previous report. Boston, Richmond, St. Louis, Minneapolis, and Dallas noted strength in professional and business services. Boston and Richmond saw growth increase for healthcare services.\nTransportation activity was mixed across the country. Trucking was weak in Philadelphia but volumes held steady in Dallas. Ports in Richmond cited record volumes in freight. Reports on manufacturing activity were uneven across the country, but positive in Boston, Philadelphia, Richmond, Atlanta, Chicago, and St. Louis.\nReports on residential and commercial real estate markets were positive. Home sales increased for most Districts, although Philadelphia and Dallas reported sales were mixed, and New York reported a decline in sales volume. Most Districts noted home price appreciation. Residential construction activity varied across most of the country. Commercial real estate activity increased at a modest pace for several Districts, while non-residential construction, especially multifamily, was strong in many Districts.\nLending activity increased since the last report. Real estate lending was up in half of the Districts. Consumer lending, particularly auto loans, rose in several Districts. Districts that reported on delinquency rates indicated that they were low. Credit quality and credit standards were mostly unchanged since the previous report.\nAmong Districts reporting on agriculture, rainfall damaged crops in Chicago and St. Louis but helped improve growing conditions in Dallas. Oil and natural gas drilling declined in Cleveland, Minneapolis, Kansas City, and Dallas. Coal production was flat in Cleveland and down in Richmond. Energy related capital expenditures were down in some Districts.\nAcross Districts, employment levels increased or were steady in most sectors, although there were some reports of layoffs in manufacturing and energy industries. Labor market tightness was reported in Boston, Atlanta, Minneapolis, and Dallas.\nMost Districts cited only modest wage pressures aside from positions that required specialized skills or were in high-demand. Prices for inputs and finished goods remained steady since the previous report.\nConsumer Spending and Tourism\nConsumer spending increased across all Districts since the previous reporting period, albeit at varying degrees. Philadelphia, Cleveland, and San Francisco noted that low energy prices were a contributing factor to improved consumer spending at some retail locations and restaurants. The strengthening dollar was cited by Minneapolis and Dallas as the cause of soft growth along border areas. Among Districts reporting on auto sales, sales were up except in St. Louis, where sales were mixed. Cleveland, Chicago, and Kansas City noted a shift in product mix from cars towards SUVs and light trucks. St. Louis reported increased activity in auto service and parts departments, with some contacts attributing this to customers investing in their own cars rather than purchasing new vehicles. Contacts in Chicago expect to record higher overall sales for 2015 due to further strengthening of new and used vehicle sales, and the outlook in Philadelphia, Cleveland, and Dallas remains optimistic.\nTourism improved in Districts reporting on the sector, with the exception of New York, where there were further signs of slowing. Richmond reported slightly stronger activity compared with a year ago, while Atlanta and Minneapolis indicated conditions were solid. Tourism strengthened somewhat in Kansas City but was lower than last year, and Philadelphia and San Francisco reported modest growth. Spending by tourists increased in Philadelphia, Richmond, and Atlanta. New tourist attractions opened in St. Louis. Hospitality contacts in Richmond and Atlanta noted strong advanced bookings for the summer season.\nNonfinancial Services\nOverall, Districts reporting on nonfinancial business services, such as information technology, healthcare, and professional and business services, indicated moderate growth since the previous report. Boston, Richmond, St. Louis, Minneapolis, and Dallas all noted strength in professional and business services. Kansas City reported that sales increased, but at a slower pace, than the previous report. In addition, San Francisco said that activity in technology services remained strong. Boston, St. Louis, and Kansas City reported expansionary plans in the nonfinancial services sector. Growth in healthcare services continued according to reports from Boston and Richmond. In contrast, plans for layoffs in education and healthcare were reported by St. Louis. Boston, Philadelphia, Minneapolis, and Kansas City noted expectations for continued growth in the nonfinancial services sector.\nReports on transportation activity were mixed. In Philadelphia, trucking activity continued to show signs of weakness. Dallas indicated trucking volumes remained steady; Richmond cited faster growth rates; and New York described activity as brisk. Warehousing and storage companies in St. Louis noted plans for new hiring and expansion. Cleveland attributed increases in freight shipments to seasonal factors and a clearing of cargo backlogs at West Coast ports. Ports in Richmond reported record volumes in container freight along with higher shipments of autos, and Atlanta ports cited double-digit increases in container trade and break bulk cargo. However, Atlanta and Dallas reported lower volumes in ocean shipping since the last report. Atlanta noted year-to-date railroad shipments were flat compared with the same period last year, as well as a decline in overall air cargo tonnage. Contacts in Cleveland have a moderate outlook for growth over the short term; the outlook in Kansas City is positive going forward; and contacts in Dallas anticipate strong demand in the third quarter.\nManufacturing\nManufacturing activity was uneven across Districts from mid-May through June. Philadelphia, Richmond, Atlanta, and Chicago reported that business activity increased. Boston reported mostly positive conditions, and St. Louis indicated that plans for manufacturing activity were positive since the previous report. In contrast, Cleveland, Kansas City, and Dallas reported a decline in activity. Minneapolis indicated mixed business activity, while New York and San Francisco reported flat conditions. Boston, Cleveland, and Dallas noted the strong dollar was dampening export demand, and slowdowns in the oil and gas industry were said to be negatively affecting orders in Cleveland, Chicago and Dallas.\nAuto manufacturers and industry suppliers in some Districts reported strong demand, with the exception of Cleveland, which reported year-over-year declines in production at auto assembly plants. Boston and San Francisco indicated that semiconductor manufacturing was either strong or on the upswing. With only a few exceptions, fabricated and primary metal producers cited strong demand and solid growth was reported in the aerospace, construction, and plastics and rubber industries. Mixed or flat growth was reported in the chemical, electronics, food, and high-tech industries.\nSimilar to current conditions, the outlook varied across Districts, with some expecting moderate improvements in demand and others expecting flat or weaker conditions.\nReal Estate and Construction\nSeveral Districts reported that residential real estate activity had increased during the reporting period, including Richmond, St. Louis, Minneapolis, and Kansas City. Additionally, New York indicated that housing markets continued to improve and Dallas noted that residential real estate activity generally remained solid. Home sales were reported as generally increasing across most markets in Boston, Cleveland, Atlanta, Chicago, St. Louis, Minneapolis, and Kansas City. Richmond cited improvement, and San Francisco reported continued growth in home sales. Philadelphia and Dallas indicated that home sales activity was mixed, and New York indicated that sales volume in some markets was down. Boston, New York, and Richmond reported low levels of inventory, and Minneapolis indicated that inventory had decreased from the year-earlier level in some markets; and Kansas City noted that inventories continued to fall. Most Districts indicated that home prices were generally up over the reporting period. Reports on residential construction activity varied by District. Richmond, St. Louis, and Minneapolis indicated that activity was mixed. Cleveland reported that single-family starts picked up across most of the District; Atlanta noted that construction was up from the year-ago level, and Kansas City indicated that residential construction expanded. Boston, Cleveland, Atlanta, Kansas City, Dallas, and San Francisco each reported contacts having positive residential real estate outlooks.\nSeveral Districts, including Chicago, St. Louis, and Kansas City, indicated that commercial real estate activity was mostly positive and that it continued to increase at a modest to moderate pace. Low and declining vacancy rates were highlighted by several Districts, including Chicago, St. Louis, Kansas City, and Dallas. New York reported that availability rates varied by submarket and property type. Rents were noted as being up slightly, increasing, or rising in Philadelphia, Richmond, and Dallas. Some Districts, like Philadelphia and Cleveland, indicated that nonresidential construction activity continued at its previous pace, while other Districts such as Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, noted an increased level of nonresidential construction activity. Multifamily construction was described as strong, elevated, robust, and picking up by several Districts, including New York, Richmond, Atlanta, Dallas and San Francisco. Commercial real estate outlooks remained fairly favorable. Philadelphia was generally optimistic, Atlanta remained positive; Kansas City expected strengthening in the months ahead; and Dallas remained cautiously optimistic.\nBanking and Financial Services\nOverall demand for loans during the reporting period increased in New York, Richmond, Atlanta, and Dallas, and was stable in Kansas City. Consumer loan demand was steady in Chicago and Kansas City. Commercial loan demand increased in New York, strengthened in Richmond, and remained robust in San Francisco. Reports of commercial and industrial (C&I) loan growth were mixed, and ranged from strong in Philadelphia, to increased in New York and St. Louis, flat in Chicago, and slower in Dallas. Loan volume increased at a modest to moderate pace in Philadelphia, Cleveland, and St. Louis. Mortgage lending grew steadily in Chicago, Kansas City, and San Francisco. Cleveland noted seasonal increases in mortgage loans, and Richmond reported a modest increase. Real estate lending was flat in Philadelphia, and increased in St. Louis. Mortgage refinancing increased in Atlanta and held steady in Chicago. Several Districts including Philadelphia, Cleveland, Atlanta, and San Francisco, reported increased consumer lending, with particularly strong growth in auto loans. Competitive pricing for prime auto loans in Chicago led to further expansion of sub-prime auto lending. Revolving credit for consumers expanded in San Francisco. Home equity lending increased in Cleveland and Atlanta, where banks faced increased competition for loans from nonbank lenders.\nCredit quality was unchanged in New York, Cleveland, and Kansas City, remained strong in Dallas, and improved in San Francisco. Richmond reported credit quality was stable with a slight decline in rural areas of the District. Delinquencies were lower in New York, remained at low levels in Cleveland and Chicago, and remained modest in San Francisco. Boston's report noted low interest rates and generous terms for commercial real estate mortgages and construction loans. Credit standards were largely unchanged in other Districts including Cleveland, Kansas City, and Dallas, while there were mixed changes in Richmond. Deposit levels increased in St. Louis, Dallas, and San Francisco, and remained stable in Kansas City.\nAgriculture and Natural Resources\nAgricultural conditions were mixed. Significant rainfall affected several Districts, with crop damage reported by Chicago and St. Louis. Chicago also noted disruptions to grain shipping caused by high Mississippi River water levels. Kansas City reported that heavy rains resulted in lowered expectations for the winter agricultural harvest, although the rain also improved soil moisture for developing crops and pastures. Dallas reported that rainfall relieved drought and improved growing conditions. Drought continued in San Francisco, although agricultural output generally expanded over the reporting period. Atlanta reported soybean and cotton plantings were close to their five-year averages. Minneapolis indicated crop progress was ahead of schedule and saw no new outbreaks of avian flu among poultry stock. Chicago and San Francisco noted the avian flu outbreak resulted in higher prices for poultry and eggs. Kansas City said beef cattle production was lower than last year, holding cattle prices high. San Francisco also mentioned low cattle supply as ranchers replenished herds. San Francisco reported demand for forestry products remained flat as foreign demand slowed and domestic gains were limited.\nReports continued to reflect decreases in oil and natural gas drilling activity in Cleveland, Minneapolis, Kansas City, and Dallas. Coal production continued to decline in Richmond and St. Louis and was little changed in Cleveland. Natural gas production was unchanged in Richmond since the previous report and growth slowed in Kansas City. Steady withdrawals of crude oil inventories continued in Cushing, Oklahoma, as seasonal demand for petroleum products picked up and refinery utilization rates rose, according to reports from Kansas City. Refinery utilization rates also remained strong in Dallas. Reports of capital spending declines continued in Cleveland, Atlanta, and Dallas, resulting in some labor cutbacks in Atlanta and Dallas. Heavy machinery manufacturers in Chicago noted weak demand from the oil and gas industry for mining equipment. Accounting firms in Dallas reported growing activity in mergers and acquisitions among oil and gas related firms, while bankers in Atlanta continued to report a slowdown in lending tied to the energy sector.\nEmployment, Wages, and Prices\nEmployment levels picked up in various industries across Districts since the last reporting period. Service-related firms in particular experienced payroll expansion in Boston, Philadelphia, Richmond, St. Louis, and Dallas. New York and St. Louis noted increased demand for human resource professionals to recruit new employees. Reports from manufacturing firms were mixed, with Cleveland, Richmond, and St. Louis noting increased job openings and/or payroll gains, whereas manufacturers in Boston and Dallas cited layoffs. Although downsizing continued in the energy sector in Atlanta, Minneapolis, and Dallas, the pace abated in Dallas since the last report. Accounts of sustained labor market tightness spanned several Districts, including Boston, Atlanta, Minneapolis, and Dallas. Firms from several Districts continued to describe shortages for particular types of skilled labor, predominantly in the construction industry.\nWage pressures were modest across most areas of the country, outside of some specialized skill and high-demand occupations in sectors such as information technology, transportation, and construction. Reports from Kansas City and San Francisco were more robust, indicating intensifying wage pressure across a broader range of industries. Cleveland, Chicago, and San Francisco all highlighted a growing sense among business contacts that recent announcements of minimum wage hikes and pay increases at a number of large retailers could prompt broader wage pressure across other industries as firms compete to remain attractive employers.\nInflation pressures remained largely unchanged since the last report. Reports from Boston, New York, Cleveland, Atlanta, and Chicago indicated that retail price growth was subdued. Richmond reported that retail price growth slowed, while Kansas City saw an acceleration in retailers' input and selling prices. Atlanta and San Francisco highlighted the dampening effect on the cost of imported goods and commodities from the appreciating dollar and softness in commodity prices.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Atlanta

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"Beige Book Report: Atlanta\nJune 3, 2015\nSixth District business contacts reported economic activity continued at a steady pace from April to May. The outlook among contacts remains optimistic with most firms expecting either the same or a slightly higher level of growth for the remainder of the year.\nDistrict merchants continued to note a softness in sales growth over the reporting period. Auto sales increased, particularly for light trucks and larger vehicles. The tourism sector saw a pickup in activity. According to residential real estate contacts, new and existing home sales were slightly up, inventories were down, and home prices modestly appreciated compared with a year ago. Commercial real estate contacts noted demand continued to improve and nonresidential construction increased from a year ago. Purchasing managers in the manufacturing sector cited notable increases in new orders and production. Banking contacts indicated that there was ample credit available to qualified borrowers and overall loan demand continued to grow. District firms continued to add to payrolls; however, reports of difficulties filling a range of positions persisted. Wage and non-labor input cost pressures remained subdued.\nConsumer Spending and Tourism\nDistrict retailers continued to experience softness in sales growth from April to May. On balance, contacts indicated that the expected increase in consumer spending due to the decline in gasoline prices had yet to materialize. Some retailers noted inventory challenges resulting from the labor dispute at west coast ports. Auto dealers, on the other hand, reported increased sales of light trucks and larger vehicles, which they attributed to lower gasoline prices. The outlook among District merchants remains generally optimistic.\nReports on tourism and business travel were positive. Florida, Georgia, and Louisiana reported strong occupancy rates at hotels and resorts. Hospitality contacts continued to report increasing capital expenditures on infrastructure as well as strong advanced bookings of hotel rooms and conferences going into the summer season.\nReal Estate and Construction\nDistrict brokers continued to report improvements in home sales activity. Many contacts reported that home sales were slightly up compared with the year earlier level. The majority of brokers indicated that inventory levels had fallen from the prior year's level and noted that buyer traffic was flat to slightly up compared with a year earlier. Brokers continued to report modest home price appreciation, and they expect home sales activity to increase over the next three months.\nIncoming signals from District builders improved. Most builders characterized construction activity as flat to up slightly from the year-ago level. New home sales activity and buyer traffic was also described as slightly up from a year earlier. The majority of builder contacts indicated that their inventory of unsold homes was down from a year ago. Most builders reported some degree of home price appreciation. The outlook among builders for new home sales and construction activity over the next three months remained positive, with the majority indicating that they expect activity to increase.\nDistrict commercial real estate brokers indicated that demand continued to improve, but they cautioned that the rate of improvement varied by metropolitan area, submarket, and property type. Commercial contractors indicated that nonresidential construction activity increased from the year-ago level across the District and noted the strength in apartment construction persisted. On balance, most contacts reported a backlog that was greater than their year earlier level. The outlook among District commercial real estate contacts remained positive.\nManufacturing and Transportation\nDistrict manufacturing contacts indicated that business activity expanded since the last report. New orders and production were notably higher, and employment levels continued to increase. Supplier delivery times for inputs were slightly longer than the previous period and finished inventory levels rose slightly. The outlook remained similar to the previous report, with a little less than half of purchasing agents expecting production levels to be higher over the next three to six months.\nDistrict transportation contacts continued to report varying levels of activity during the reporting period. Ports continued to report strong growth in containerized, bulk, and break-bulk cargo. Railroad contacts reported that total traffic, as compared with a year ago, was flat to slightly down. Trucking activity expanded as compared with year earlier levels. Most contacts expect higher levels of activity over the course of the year.\nBanking and Finance\nOn balance, bankers described credit conditions as unchanged from April to May. Credit remained readily available for qualified borrowers. Contacts reported increased loan demand attributed to an improved business climate rather than anticipation of higher interest rates in the near future. Competition between some lenders resulted in looser lending standards. Pricing for both commercial and consumer loans was extremely competitive as many financial institutions strived to grow their loan portfolios. Auto lending continued to grow at a steady pace.\nEmployment and Prices\nMany businesses reported that they added to payrolls, generally in response to increased demand or expectations of higher sales growth. Contacts noted that employee retention was becoming a challenge, as a growing number of employees were being recruited away by other firms or leaving for different jobs. Firms continued to cite difficulties filling positions in professional and skilled roles, and some contacts also reported challenges filling lower-skilled, entry-level positions. The outlook for employment remains positive, with many firms indicating plans to hire over the next twelve months.\nWage pressures remained muted, despite a growing expectation that compensation may have to be adjusted in the future to retain and attract workers. Employers were closely watching how the recent minimum pay announcements from a number of high-profile employers would affect local labor markets. Non-labor input cost pressures remained subdued, helping to support ongoing improvement in profit margins. According to the Atlanta Fed's survey of business inflation expectations, unit costs are expected to increase 1.9 percent over the coming year, up from 1.7 percent earlier in the year.\nNatural Resources and Agriculture\nReductions in drilling activity attributed to oil price declines continued to impact District oil and gas support services, leading to decreased business activity and a pickup in layoffs. Contacts continued to cite delays in investment of industrial refining and onshore drilling projects, specifically ones that had not already begun.\nSignificant rain alleviated drought conditions in much of the District. Florida's orange forecast was below both the previous month's reading and last year's production level, primarily due to citrus greening. Some Alabama producers reported planting less cotton in favor of crops commanding better prices or crops that cost less to produce (such as soybeans and peanuts). By mid-May, soybean planting was ahead of the five-year average in Louisiana, Mississippi, and Tennessee. Cotton planting in Alabama and Georgia and rice planting in Louisiana and Mississippi were short of their five-year averages.\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 3, 2015\nThe Second District's economy has continued to expand at a modest pace since the last report. Businesses report that selling prices remain mostly stable, though service sector firms indicate ongoing upward pressure on input prices and wages. Labor market activity has been more subdued in recent weeks. Consumer spending showed further signs of weakening in April, though there were some indications of a rebound in early May. Housing markets were steady to stronger; office and retail markets were mixed, while the market for industrial space continued to strengthen. Commercial construction and multi-family residential construction have picked up thus far in the second quarter. Finally, banks report stronger loan demand, continued narrowing in loan spreads, and lower delinquency rates across the board.\nConsumer Spending\nRetailers report that sales were weak and generally below plan in April but rebounded, to varying degrees, in early May. Two major general merchandise chains and a major upstate New York mall all indicate that sales were down from a year earlier and generally short of plan in April. Unseasonably cold weather and a shift in Easter from April to March this year were blamed for only part of the weakness in April. Retail contacts reported that sales picked up in May but were still described as on or below plan, with underlying demand characterized as somewhat weak in both months. Inventories are generally said to be at satisfactory levels, with one contact noting that delays at west coast ports have subsided. Prices are reported to be generally steady; one major chain indicates that pricing is less promotional than a year ago, while another chain reports that it is somewhat more so.\nAuto dealers report mixed results for April and early May. Rochester area dealers report that new vehicle sales were down slightly from a year earlier in April and remained soft in May. Buffalo area dealers indicate that sales picked up somewhat in April and May, following a weak March. Though growth has been slow in both areas, sales activity remains at a fairly high level. Contacts note some tightening in auto lending standards, but generally report that credit conditions remain in good shape. Tourism activity in New York City has shown further signs of slowing in recent weeks: both Manhattan hotels and Broadway theaters report some recent weakening in revenues, and a retail contact notes some softening in tourism-related sales.\nConstruction and Real Estate\nThe District's housing markets have been mixed but generally stronger since the last report, with lean inventories reported in many areas. Buffalo area real estate contacts report that, after a weak first quarter, the housing market has strengthened noticeably in April and early May: low inventories have restrained sales activity somewhat but have buoyed prices and prompted bidding wars. Reports from Realtors associations across New York State more broadly point to a moderate pickup in the housing market, with inventories down and prices running about 5 percent ahead of comparable 2014 levels. Northern New Jersey has seen more modest gains, with one contact noting that an ongoing overhang of foreclosures continues to weigh on the market. New York City's co-op and condo market has been mixed but generally steady since the last report. Low and declining inventories and strong demand continue to drive up prices in Brooklyn and Queens. The same pattern is occurring in Manhattan, except at the high end of the market, where abundant new development has pulled down sales prices of luxury apartments.\nResidential rental markets have been mixed but mostly stronger thus far in the second quarter. Apartment rents are running 2-5 percent ahead of a year ago across most of the District, though they have leveled off in Manhattan. Rental vacancy rates declined in northern New Jersey and across upstate New York, but were little changed in Long Island and most of New York City. Multi-family construction has been increasingly robust across most of the District.\nCommercial real estate markets across the District have been mixed, with industrial markets continuing to strengthen but office and retail markets generally steady. Office availability rates have edged down in upstate New York and northern New Jersey, though they remain quite elevated in the latter. Rates remain steady across Manhattan but have risen to multi-year highs in Westchester and Fairfield counties. The market for retail space has also been generally stable, with rents rising modestly in most areas. Industrial markets, however, have generally strengthened: industrial vacancy rates have declined across upstate New York, northern New Jersey, and New York City and are at or near multi-year lows across most of the District. Industrial rents have been rising steadily across most of the District. While industrial construction has been subdued, office construction has picked up across northern New Jersey, upstate New York and particularly in Manhattan.\nOther Business Activity\nManufacturing firms report that activity has been flat thus far in the second quarter. However, business contacts in most industry sectors report that activity has expanded moderately. The trucking industry has done particularly well, helped by reduced diesel prices and brisk demand, as well as catching up on transporting the backlog of goods from west coast ports. While manufacturing contacts report that input prices have been stable, service sector firms report upward pressure on input prices, as well as wages. However, both manufacturers and service firms continue to report that selling prices remain generally stable.\nThe labor market has shown signs of leveling off since the last report. Fewer contacts in both manufacturing and other sectors report that they are expanding employment, on net, though a sizable proportion of service-sector firms plan to expand employment in the months ahead. One major New York City employment agency reports that hiring activity has slowed somewhat from the brisk pace seen in March but that the job market continues to improve at a modest pace, with slight upward pressure on salaries. The pool of job candidates remains tight--particularly for IT workers--with one contact noting that candidates from outside the New York City area are deterred by high housing costs. A trucking industry contact also notes an ongoing widespread shortage of drivers.\nFinancial Developments\nSmall to medium-sized banks in the District report widespread increases in demand across all loan categories--particularly non-residential mortgages--while demand for refinancing was unchanged. Contacts indicate that credit standards remained unchanged across all loan categories. Bankers report a decrease in spreads of loan rates over cost of funds across all loan categories, except on consumer loans. Finally, bankers report widespread decreases 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"

Philadelphia

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"Beige Book Report: Philadelphia\nJune 3, 2015\nAggregate business activity in the Third District continued to grow at a modest pace during this current Beige Book period. Staffing firms and other general service-sector firms continued to report a moderate pace of growth; auto sales grew moderately as well--a slight pick-up in pace from the prior reporting period. Nonauto retailers and contacts involved in both the construction and leasing of commercial real estate continued to report modest growth. Manufacturers, meanwhile, continued to report only slight growth, while transportation activity appeared to decline slightly. Brokers reported modest growth in regard to existing home sales, and residential builders reported mixed construction and sales activity. Reports from tourism contacts were generally positive with encouraging signs for a solid summer season.\nLending volumes appeared to accelerate to a modest pace of growth, and credit quality continued to improve. As in the previous Beige Book, contacts reported slight increases in wages and home prices. Contacts continued to anticipate moderate growth of economic activity over the next six months.\nManufacturing\nOverall, Third District manufacturers continued to report a slight pace of growth during the latest Beige Book period. New orders grew slightly, while shipments remained mostly flat. Gains in activity appeared to be stronger among the makers of industrial machinery, paper products, and rubber and plastic products; activity appeared weaker among the makers of primary and fabricated metal products. Contacts whose businesses are involved in natural gas and pipeline work noted negative impacts of low energy prices through decreased drilling activity and lowered capital expenditure budgets.\nExpectations of business activity growth during the next six months have changed little since the last Beige Book report and remained positive at levels typical for an expansionary period. Additionally, firms had higher expectations of future employment and steady capital expenditures.\nRetail\nRetail sales grew modestly over the year, on average, according to Third District contacts. For area malls, April sales appeared to have been negatively impacted by an earlier Easter this year, which likely pushed back holiday-related purchases into March. An outlet mall operator reported moderate sales growth for April over the year but said that sales would have been higher if Easter had fallen later in the month. Regular malls reported a more negative impact. Year-over-year sales for April for regular mall retailers were down overall and for apparel; however, when combined with March sales, which were stronger, to account for the effect of the Easter shift, net sales were modestly positive. Contacts also reported restaurant sales increased moderately at both malls and outlet malls in April, which they attributed to nicer weather and more discretionary spending by consumers. Contacts continued to expect modest growth throughout 2015.\nAuto dealers reported moderate growth in sales year over year, a slight pick-up in pace from the last reporting period. A Pennsylvania contact reported that sales in April were slightly better than last year, which itself was a strong year. Sales in New Jersey were flat through April over the year. One New Jersey contact showed little concern about the slower growth, noting that sales were strong in 2014 and current year-to-date statewide sales volumes are approaching record highs. Contacts cited anecdotal evidence suggesting strong sales in May in both Pennsylvania and New Jersey. Auto dealers remained optimistic for continued growth in 2015.\nFinance\nThird District financial firms have reported modest overall increases in total loan volume since the previous Beige Book. Strong growth was reported for commercial and industrial lending, credit card lines, and auto loans. Loans secured by real estate grew modestly, and other consumer credit lines declined slightly. On a year-over-year basis, loans secured by real estate were up slightly, while most other loans were up modestly. Banking contacts generally expressed continued confidence in the quality of their loan portfolios. According to a mortgage servicing contact, the mortgage industry continues to normalize and lending standards appear to be loosening somewhat. Newer vintages of mortgages have not performed as well as vintages from a few years ago but continue to perform well historically. Contacts are generally optimistic for continued growth prospects in 2015.\nReal Estate and Construction\nThird District homebuilders have reported mixed conditions and little overall growth since the last Beige Book. Traffic remained disappointing through April, and contract signings were down. Moreover, homebuilders continued to report an absence of young first-time homebuyers. Contacts indicated that activity in May has been slow and inconsistent after having been stronger at the beginning of the year. Brokers reported that existing home sales slowed somewhat in April on a year-over-year basis throughout most of the larger urbanized areas of the Third District, including the Jersey Shore. An exception was the Greater Philadelphia area, where a broker indicated that the market was starting to fare better in April, with sales in the region improving on 2014 and 2013--which had been a stronger year--as well. Further, pending sales increased in April, suggesting to him that the pipeline is picking up, though the active inventory of houses in the fastest-selling price points remains low. Overall, prices are rising slightly.\nNonresidential real estate contacts reported that construction and leasing activity continued at a modest pace. New construction continued to be driven by projects in downtown Allentown and Philadelphia that include office, retail, and residential components. Throughout the Third District, industrial/warehouse projects and suburban office renovations remain active and in demand. Contacts attributed a little continued rent pressure on office space to some emerging employment growth. Demand and rent pressures are greatest in downtown Philadelphia and have been spilling over into suburban areas, especially for Class A or better office space. Contacts remained optimistic for the ongoing growth of both new construction and leasing activity in 2015.\nServices\nOverall, Third District service-sector firms have continued to report moderate growth in activity since the previous Beige Book. Firms continued to report increases in new orders and sales, on net. A central Pennsylvania staffing contact reported that demand for services has remained consistently strong since the previous Beige Book, with hiring occurring across sectors, including health, education, and manufacturing. The contact noted some difficulty in finding enough qualified people to fill open positions and that the most in-demand skill is accounting. According to a transportation services analyst, even taking into account a temporary lull due to regulatory constraints, both trucking and rail activity looked weaker compared with a year ago. Several service-sector firms reported little or no wage pressures. Service-sector contacts continue to be optimistic that growth trends for their firms will remain positive over the next six months.\nThird District tourist areas reported steady activity along with strong early booking activity heading into the summer season. Contacts reported strong rental rates for season resorts in southern New Jersey along the shore. Casinos that remain open in Atlantic City following last year's downsizing are showing some improvement; although the overall number of visitors is slightly reduced, existing casinos have been able to realize higher occupancy rates. A Delaware banking contact noted that outlet shopping centers along the Delaware shore have seen elevated traffic counts and that a forecast for a below-average hurricane season this year is encouraging for summer shore activity.\nPrices and Wages\nThe overall price level has continued to increase slightly since the previous Beige Book period. Nonmanufacturing firms continued to report increases in the prices they pay for inputs and the prices received for their goods and services. Furthermore, the share of firms reporting higher prices for their goods and services has grown notably since the prior period. Most manufacturing firms reported steady input prices and prices for their own products. Contacts reported expectations of stable prices for food and commodities. Most contacts, including those from staffing firms, continued to note little significant change in wage pressures.\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 3, 2015\nPrepared at the Federal Reserve Bank of Dallas based on information collected on or before May 22, 2015. This document summarizes comments received from businesses and other contacts outside the Federal Reserve and is not a commentary on the views of Federal Reserve officials.\nReports from the twelve Federal Reserve Districts suggest overall economic activity expanded during the reporting period from early April to late May. Activity in the Richmond, Chicago, Minneapolis, and San Francisco Districts was characterized as growing at a moderate pace, while the New York, Philadelphia, and St. Louis Districts cited modest growth. Contacts in the Boston District reported mixed conditions, and the Cleveland and Kansas City Districts indicated a slight pace of expansion. Compared to the previous report, the pace of growth slowed slightly in the Dallas District but held steady in the Atlanta District. Outlooks among respondents were generally optimistic, with growth expected to continue at a modest to moderate pace in several districts.\nManufacturing activity generally held steady or increased over the reporting period, except for in the Dallas District where it was slightly weaker and in the Kansas City District where it fell markedly. Strength was seen in transportation equipment manufacturing, while continued weakness was reported in primary and fabricated metals products and energy-related industries. Most districts reported an uptick in retail spending, and outlooks were positive, with retailers expecting continued sales growth in 2015. Overall vehicle sales rose, particularly for trucks and SUVs which auto dealers in some districts attributed to lower gasoline prices. Travel and tourism expanded across most reporting districts, except for the New York and Kansas City Districts.\nDemand for nonfinancial services increased, and staffing firms reported steady or higher activity. Port activity was strong in the Richmond, Atlanta, and Dallas Districts, but reports on other freight and transportation services activity were mixed. Most districts said residential and commercial real estate activity and construction improved since the last report. Home prices continued rising and low home inventories continued to constrain sales activity in some areas of the country. Overall loan demand increased, with particular strength noted in the New York District. Credit quality and delinquency rates were stable or improved. Credit standards were mostly unchanged, except for scattered reports of easing in the Philadelphia, St. Louis, Atlanta, and San Francisco Districts.\nThe agricultural sector improved as significant rainfall alleviated the dry spell or improved growing conditions in several districts. However, drought conditions persisted in the San Francisco District and the outbreak of the avian flu severely impacted poultry producers in the Chicago and Minneapolis Districts. Oil and natural gas activity continued to decline in most districts, except for Cleveland where the rig count leveled off. Coal production was flat to down.\nEmployment levels were up slightly over the reporting period, with some reports of layoffs. Wages rose slightly. Prices were stable or ticked up, although manufacturers in some districts cited lower input prices.\nManufacturing\nManufacturing was mostly flat to up over the reporting period, except for in the Dallas District where it was steady to slightly weaker and in the Kansas City District where it declined sharply. Growth was moderate in the Boston, Atlanta, Chicago, and St. Louis Districts. The Philadelphia District reported slight growth, while factory activity was mostly flat in the New York, Cleveland, Richmond, San Francisco, and Minneapolis Districts.\nGrowth rates varied across industries. Demand for transportation equipment manufacturing was strong in the Cleveland and Chicago Districts, and machinery manufacturers reported solid gains in the Philadelphia District and were expanding operations in the St. Louis District. Demand for high-tech products softened in the Dallas District, but sales of semi-conductors picked up in the San Francisco District. Manufacturers of construction materials and/or machinery continued to see strengthening demand in the Cleveland and Chicago Districts, but unusually wet weather caused demand to flatten in the Dallas District. Demand increased for rubber and plastics products in the Philadelphia and Richmond Districts, and contacts in the biotech and pharmaceutical industries in the San Francisco District reported strong growth and record levels of activity in mergers and acquisitions. Reports of weaker activity for primary and/or fabricated metals manufacturing came from the Philadelphia, Richmond, St. Louis, Kansas City, and Dallas Districts. Reports on the steel industry were mixed; the Cleveland and San Francisco Districts reported some continued weakness, in part due to a strong dollar, while some contacts in the Richmond and Chicago Districts said steel shipments and/or capacity utilization picked up over the reporting period. The impact of the strong dollar was felt in other industries as well, with the Boston, Cleveland, Chicago, Minneapolis, and Dallas District noting its negative impact on export sales or capital investment in segments with significant overseas exposure.\nThe downturn in the oil and gas industry tempered manufacturing growth in over half the districts, particularly for industries dependent on the energy sector. These districts were Boston, Philadelphia, Cleveland, Chicago, Minneapolis, Kansas City and Dallas. The Kansas City District reported that manufacturing production fell most sharply in the district's energy-producing states like Oklahoma and New Mexico. The Dallas District noted that oilfield machinery sales remained weak and were down significantly from a year ago, and the Philadelphia District said businesses involved in natural gas and pipeline work noted negative impacts from decreased drilling activity and lowered capital expenditures. Contacts in the Boston District said the slowdown in oil and gas investment has been much bigger and faster than anticipated.\nCleveland and San Francisco District contacts generally increased their capital spending budgets over the reporting period, while contacts in the Minneapolis and Kansas City Districts noted declines and Boston and Philadelphia District contacts said capital expenditures were steady. Overall outlooks among manufacturers were generally positive, with some exceptions in the Cleveland, Kansas City, and Dallas Districts.\nConsumer Spending and Tourism\nConsumer spending increased across the districts since the prior report, except in the Richmond District, where retail sales were unchanged, and in the New York District, where retail sales fell slightly. Retailers in the New York District and mall retailers in the Philadelphia District said April sales were down year over year and attributed some of the weakness to the Easter holiday falling earlier this year. The Boston, Cleveland, and Kansas City Districts observed stronger sales on a year-over-year basis. A few districts noted weak demand for apparel, including Boston, Philadelphia and Chicago. The Chicago and San Francisco Districts reported strong sales in the entertainment and gaming sector. Contacts in the Cleveland and San Francisco Districts said low gasoline prices provided a tailwind for consumer spending, while contacts in the Atlanta District said this had yet to materialize. Inventory levels were mostly reported as satisfactory. A contact in the New York District said delays at West Coast ports have subsided while contacts in the Cleveland, Atlanta, and Dallas Districts said they were still being negatively impacted by residual effects of the strike. Outlooks among retailers were mostly positive, expecting continued growth throughout 2015.\nAuto sales were up across the districts, except for in New York where they were flat on net and in Cleveland where they declined slightly. Sales growth was strongest in the Richmond, Chicago, and San Francisco Districts. Lower gasoline prices continued to spur a shift from cars to light trucks or SUVs in the Cleveland, Atlanta, and Chicago Districts, and auto dealers in the St. Louis and San Francisco Districts also noted stronger growth in trucks and SUVs relative to other models. A Philadelphia District contact said auto dealers were in a slower growth mode as a result of strong sales in 2014, and noted that current sales volumes were approaching record highs. Auto inventories rose in the Kansas City and Richmond Districts, and in the Chicago District inventories were elevated for car dealerships due to increased demand for SUVs and trucks. Outlooks were generally optimistic for further auto sales growth in 2015.\nTourism and travel improved in several districts but showed signs of continued slowing in the New York District and moved down in Kansas City. Hotel occupancy was up in the Boston, Richmond, and San Francisco Districts, and was strong in the Atlanta District. In the New York District, Manhattan hotels and Broadway theatres reported lower revenues. Restaurant sales increased in the Boston, Philadelphia, and San Francisco Districts but remained weak in the Kansas City District, although contacts there anticipate growth in coming months. Strong summer hotel and resort bookings were noted in the Philadelphia, Richmond, Atlanta, and Minneapolis Districts.\nNonfinancial Services\nDemand for nonfinancial services, such as information technology, healthcare, and professional and business services generally expanded since the previous report. The Kansas City and San Francisco Districts noted moderate growth in demand for information technology services, while mixed business conditions were reported by software and IT services contacts in the Boston District. Revenues at engineering and architectural services firms increased, according to Richmond's report. Activity in healthcare services was strong according to reports from the Richmond and San Francisco Districts, and a few San Francisco District contacts noted that the Affordable Care Act was a source of continued growth. The Richmond and Dallas Districts noted continued strength in accounting services. The Dallas District report cited mixed demand for legal services, while activity at legal firms in the San Francisco District remained weak and contacts said that many new graduates were underemployed or working in other fields. Service providers in the Boston, Philadelphia, and Dallas Districts have an optimistic outlook and professional and high-tech services contacts in the Kansas City District reported solid capital spending plans.\nStaffing services demand generally grew at a stable or improved pace since the prior report. Demand for staffing services ticked up in the Cleveland and Dallas Districts, and grew at steady pace in the Philadelphia and Chicago Districts. A recruiting firm in the Minneapolis District said demand expanded at a faster clip compared with the past few years, and a staffing contact in the Richmond District said employers were making hiring decisions more quickly. In contrast, an employment agency in the New York District said hiring activity slowed slightly from the brisk pace seen in March, and reports from staffing agencies in the Boston District were mixed, ranging from strong growth in demand to continued weakness.\nReports on transportation services and freight activity were mixed. Transportation firms saw stronger activity in the Kansas City District. Demand for air travel was stable in the Dallas District. Port activity remained strong in the Richmond, Atlanta, and Dallas Districts, and ports continued to get diverted traffic from the West Coast, according to Richmond's report. Rail traffic held steady or declined in reporting districts. Demand for trucking services was characterized as brisk in the New York District, while slight increases relative to the last report were noted in Richmond. Trucking activity expanded year over year in the Atlanta District, but fell in the Philadelphia District. Trucking firms in the Dallas District saw mixed demand. Reports on freight volumes were mixed in the Cleveland District, and contacts seeing softer demand cited the slowdown in the steel and energy industries as a source of the weakness. Air freight volumes declined in the Dallas District, while intermodal transportation and transport of seasonal goods increased, according to Cleveland's report.\nConstruction and Real Estate\nResidential real estate activity and construction expanded in most districts since the prior report, and outlooks were largely positive. Homes sales rose strongly in the Minneapolis District on a year-over-year basis, while more modest to moderate gains were reported by all of the remaining districts, except for Philadelphia where builders reported mixed conditions for new \u00a0home sales and brokers noted slightly slower existing-home sales in April on a year-over-year basis.\nSales of low- and medium-priced homes outpaced sales of higher-priced homes in the Kansas City District. Contacts in the Cleveland District said most new-home contracts were in the move-up price points, while the Dallas District noted declining sales in Houston for mid-priced new homes. Tight inventories were restraining sales growth in the Boston and New York Districts, although pending sales were up in the Boston District, suggesting that closings would rise in coming months. Home prices rose across much of the country, which contacts in some districts attributed to low inventories relative to demand.\nResidential construction was flat to up during the reporting period, although a few districts reported a slower pace of homebuilding activity due to financing and capacity constraints and severe weather. Residential construction activity increased slightly in the Chicago District, where contacts expressed concern that the current strong pace of apartment construction was unsustainable. Homebuilding was flat in the Minneapolis and Kansas City Districts. Rainfall delayed lot deliveries and new home starts in the Dallas District, and several builders in the Cleveland District commented that there is desire to build more speculative homes, but capacity and financing constraints have made it difficult to increase inventory.\nApartment demand was strong in the Dallas District, and held steady in the Richmond District. Tight inventories and strong sales continued to push up prices, except for at the high end of the Manhattan market, according to New York's report. Condo sales rose in the Richmond District, but declined in the Boston District. Rents and prices increased in districts that commented on them, and one San Francisco District contact said that high apartment prices have led young buyers to consider single-family homes. Strength in multifamily construction was reported in the Cleveland, Atlanta, and San Francisco Districts, and the Richmond District continued to experience steady apartment building activity.\nCommercial real estate leasing and construction activity improved in most districts, and outlooks were optimistic. The New York District reported a strengthening industrial market and steady office and retail leasing demand. In the Boston District, demand for office space held steady at a decent to solid pace, except for in Hartford where demand was slow. The Dallas District continued to see active industrial, retail, and office leasing activity, with the exception of the Houston office market. Both commercial real estate development and leasing activity increased across the San Francisco District, mostly fueled by growth in the technology industry. Contacts in the St. Louis District noted a tight office market for Class A space, and continued commercial and industrial construction. Commercial building increased in the Chicago District driven by demand for industrial and office space, and new hotel and office development in downtown Chicago was compelling retailers to relocate. The Cleveland and Atlanta Districts noted increased construction backlogs, and shortages of skilled labor remained a constraint on construction activity in some districts, such as Boston, Cleveland, and San Francisco.\nBanking and Finance\nLending activity increased during the reporting period. Several districts, including Philadelphia, Richmond, Atlanta, St. Louis, and San Francisco reported modest to moderate increases in loan volumes. The New York District noted a strong, broad-based pick up in loan demand since the previous report; however, the Dallas District reported slower overall growth. Commercial and industrial loan demand improved in the Philadelphia, Cleveland, St. Louis, and San Francisco Districts, though it was characterized as stable in the Richmond and Kansas City Districts. Business lending expanded at a slower pace in the Dallas District, and the Chicago District saw an uptick in loan demand from small and large businesses, but weaker middle-market lending activity, particularly from the oil and gas industry. Commercial real estate financing held steady in the Kansas City District, while exhibiting continued strong growth in the New York, Cleveland, Chicago, and Dallas Districts.\nOn the consumer lending side, several districts noted increased demand for auto loans, including Philadelphia, Cleveland, Atlanta, St. Louis, and Dallas. Demand for credit cards fell in the St. Louis District, but grew strongly according to Philadelphia's report.\nReports on mortgage lending were mixed. Residential real estate lending rose in the San Francisco District, where one contact reported increased hiring of loan originators, processors, and underwriters to meet growing mortgage demand. The Richmond, Chicago, St. Louis, Kansas City, and Dallas Districts reported an uptick in residential mortgage loans, and contacts in the Cleveland District said the increase in residential mortgage demand was largely for new home purchases. Refinancing activity was unchanged in the New York District; however, it weakened in the Richmond and Chicago Districts. Home equity loan demand rose in the Cleveland District, but was characterized as low in the Chicago District.\nCredit conditions generally remained stable or improved. Widespread declines in delinquency rates were seen in the New York and St. Louis Districts, and delinquencies edged down in the Cleveland District from already low levels. Most bankers in the Philadelphia and Kansas City Districts expressed continued confidence in the quality of their loan portfolios. The Dallas District reported that default rates and charge-offs were at all-time lows, and consumer credit quality improved slightly in the Chicago District.\nCredit standards remained largely unchanged, with a few exceptions. The Philadelphia and St. Louis Districts noted slight easing of credit standards for mortgages and C&I loans, respectively. Competition among some lenders led to looser credit standards in the Atlanta District, and contacts in the San Francisco District commented that some financial institutions were relaxing lending standards or looking for new revenue sources in part due to downward pressure on net interest margins.\nAgriculture and Natural Resources\nAgricultural conditions improved for most reporting districts, except for in San Francisco where drought conditions persisted. Significant rainfall alleviated drought conditions and/or improved growing conditions in much of the Atlanta, Minneapolis, Kansas City, and Dallas Districts. Overly wet areas in the Richmond and St. Louis Districts dried enough for planting to move ahead, while in the Dallas District wet field conditions prevented some producers in South Texas from planting crops in time. Crop planting was underway across the reporting districts and progressing at an above-average pace in the Chicago, St. Louis, and Minneapolis Districts, and for soybeans in the Atlanta District. Contacts across several districts reported that crop prices for cotton, wheat, corn, and soybeans remained low and in some cases moved lower over the reporting period, while cattle prices remained historically high. The St. Louis, Minneapolis, and Kansas City Districts said farm income declined. The Chicago District said poultry flocks were hit hard by avian flu, and the Minneapolis District noted that the outbreak was expected to cost Minnesota producers more than $300 million.\nReports indicated that oil and natural gas drilling activity continued to decline in the Atlanta, Minneapolis, Kansas City, Dallas, and San Francisco Districts, while the Cleveland District said the number of rigs operating in the Marcellus and Utica shale regions leveled out in April after sharp declines in the first quarter. A survey of energy services firms in the Minneapolis District showed that 75 percent of respondents had lower revenues than a year ago and half had lower capital expenditures, and contacts in the Dallas District also noted a drop in capital expenditures this year. The Kansas City District reported continued layoffs at regional oil and gas firms, but contacts said that if a further rebound in oil prices occurs and holds, drilling could ramp back up later this year. Coal production declined in the Richmond and St. Louis Districts but was little changed in the Cleveland District. The Cleveland District noted declines in coal prices over the reporting period while coal prices were reported as flat in the Richmond District.\nEmployment, Wages, and Prices\nEmployment levels were up slightly across districts over the reporting period. Reports of hiring came from a variety of industries, and the Boston, Richmond, Atlanta, and St. Louis Districts noted employment gains in manufacturing. Some instances of layoffs were mentioned by the St. Louis, Minneapolis, and Dallas Districts. The Richmond District cited employment declines in West Virginia's coal and gas industries and the Minneapolis District said online job openings in the energy-producing area of North Dakota were down significantly from a year ago. Reports of labor shortages spanned several districts including Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, and Kansas City. An ongoing and widespread shortage of truck drivers was noted in the New York, Cleveland, and Kansas City Districts. Firms in the Cleveland, Atlanta, Chicago, and Minneapolis Districts reported difficulty retaining employees. The New York District said a sizeable proportion of service-sector firms plan to expand employment in the months ahead.\nSlight growth in wages was reported by most districts. A tight market for skilled construction labor in the Boston, Dallas, and San Francisco Districts pushed up wages for workers there, and staffing services firms in Boston, New York, and Dallas noted rising wages. The Richmond, Kansas City, and San Francisco Districts noted higher wages in the restaurant and/or hospitality industries. Some contacts in the IT sector in the San Francisco District reported rapid wage gains, and their counterparts in Boston noted rising wages as well. Employers in the Atlanta District were monitoring how recent minimum pay announcements from a number of employers would affect local labor markets. Contacts across various industries in the Chicago District reported a willingness to raise wages when necessary to attract and retain workers, and a notable share of reporting firms in the Minneapolis District also said they were increasing starting pay for most job categories to attract new hires.\nDistricts reported stable or slightly increased prices overall during the reporting period. Several districts--Boston, Philadelphia, Cleveland, and Kansas City--noted softer input prices in the manufacturing sector, while the Richmond District reported that manufacturing prices paid accelerated slightly, and manufacturers in the New York and Dallas Districts said input prices were stable. The New York District reported upward pressure on input costs among service sector firms, and there were reports of increased transportation costs and/or fuel prices in the Cleveland, Minneapolis, Kansas City, and Dallas Districts. Selling prices rose among service-sector firms in the Philadelphia and San Francisco Districts, among manufacturers and retailers in the Richmond District, and among retailers and restaurants in the Kansas City District. Manufacturers in the Cleveland District were reluctant to pass through lower input prices to customers. Selling prices were stable in the New York and St. Louis Districts and among retailers in the Cleveland and Chicago Districts. Low oil prices and the strong dollar reduced input and transportation costs for agricultural producers in the San Francisco District, putting downward pressure on prices in that sector.\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 3, 2015\nThe Fifth District economy grew at a measured pace since the previous report. Growth in manufacturing shipments and new orders leveled off, although expectations for the months ahead remained positive. Retail sales were also little changed on balance; however, revenues strengthened at non-retail services firms and tourism picked up. Loan demand increased moderately. Residential real estatebuyer traffic was steady and commercial real estate activity increased modestly. Agricultural conditions improved and planting moved ahead. Energy production was soft. The demand for labor increased modestly.\nAccording to our most recent surveys, manufacturing and service sector hiring improved slightly in recent weeks, while average wages rose. Manufacturing prices paid accelerated slightly, while prices of finished goods rose more slowly. Retail prices grew moderately faster, and prices were little changed at non-retail services firms. Energy prices were flat to lower.\nManufacturing\nManufacturing activity remained tepid overall since our last report. Growth in shipments and new orders leveled off, although expectations for the months ahead remained positive. A furniture manufacturer in southern Virginia reported no change in shipments, but his volume of new orders rose due to strong demand from the annual furniture market. A manufacturer of dental products in North Carolina reported a vast improvement in sales since our previous report, partly due to new customer growth. Additionally, a North Carolina textile company reported that production for auto-related business was very good in the last month. A business contact said manufacturing activity in West Virginia was mixed, noting that shipments had increased for some steel, plastics, and rubber manufacturers, but remained flat for a fabricated metal producer and a chemical manufacturer. On the other hand, a Maryland pipe manufacturer stated that business was soft in the past month, with slower growth in new orders and shipments. An executive at a fabricated metal product company in South Carolina reported that sales decreased in recent weeks. According to our most recent survey,prices of raw materials rose at a somewhat faster pace, while price growth of finished goods slowed slightly.\nPorts\nPort officials reported stronger import volumes in the weeks since our last report, although exports have weakened. Container traffic continued to grow at a brisk pace. According to one port official, core exports, such as automotive components, remained solid but are not growing overall, owing at least in part to the strong dollar. However new business has increased in agricultural exports such as soybean meal and wheat being shipped to developing nations. Imports of roll-on, roll-off cargo are up slightly year-over-year at another port. District ports continued to get some West Coast diversions and overflow from congested ports.\nRetail\nRetail sales were little changed on balance since the previous Beige Book, with scattered reports of strength. On the positive side, the manager of a West Virginia sporting goods store said he had a good spring and recent efforts to control inventory had reduced year-over-year levels. However, he continued to face online competition from his suppliers. Sales of cars and light trucks remained robust. According to a dealer in the Washington beltway area, his firm has increased inventory and is hiring staff to keep up with the increase in demand. Prices in the retail sector rose moderately faster since the prior report.\nServices\nRevenues strengthened at non-retail services firms in the weeks since the previous report. Executives at healthcare systems said that demand for services remained strong. Revenues increased for professional, scientific, and technical firms, such as engineering and architect services. A partner in an accounting firm reported that demand for services remained constant at solid levels. Trucking firm executives reported only a slight seasonal uptick in demand. Services prices increased at a relatively steady pace.\nTourism picked up since the prior report. An hotelier in western North Carolina said tourism in his region \"has been booming;\" bookings were strong and reservations for the end of this season were also slightly ahead of a year ago. On the outer banks of North Carolina, bookings were solid, with numerous events planned. Moreover, several new, year-round businesses have opened. The manager of a resort hotel in western Virginia reported current bookings were seasonally flat while late summer bookings were solidly up year-over-year. A few contacts reported increased competition from new hotels. Room rates and rental rates increased modestly at a few locations.\nFinance\nLoan demand increased moderately since our previous Beige Book. Residential mortgage demand rose across much of the District, although a West Virginia lender said demand was flat. A central Virginia banker noted that his increased activity stemmed from existing home sales and lot closings. Demand for residential refinance loans slowed in Virginia and West Virginia. Reports on commercial lending were mixed. Construction and development lending picked up according to executives in Maryland, Virginia, and South Carolina, particularly for government, education, and medical facilities as well as church expansions. Commercial and industrial lending, however, was reported as flat in South Carolina and West Virginia. Regulatory burdens, especially for commercial lending, were cited by several contacts as damping growth prospects. Credit quality was widely reported as stable, except in West Virginia where quality declined slightly. Credit standards were also largely unchanged, although a Virginia lender said that conventional mortgage guidelines had relaxed somewhat. Interest rates were reported to be marginally lower in Maryland and Virginia, while upward rate pressure was reported in West Virginia.\nReal Estate\nDistrict housing market activity increased at a moderate pace since the previous report. Realtors reported steady buyer traffic and a slight improvement in housing inventories. Average sale prices increased slightly in some markets while days on the market varied. A broker in Richmond stated that the spring market has been strong in certain areas and there are more new construction transactions. Additionally, a residential builder in Maryland reported that activity in recent weeks had been very good, with a solid number of sales and increased prices. A Realtor in Fredericksburg, Virginia reported strong demand for single-family townhomes and a contact in Richmond reported increased condo sales. Multifamily leasing and construction activity remained steady throughout the District, with reports of higher rental rates.\nCommercial real estate market activity increased modestly since the previous report. Several Realtors reported that rental rates firmed up since our previous report. Vacancy rates decreased modestly in Washington D.C., Richmond, Baltimore, Charlotte, Hampton Roads, and Charleston, South Carolina. However, vacancy rates were mostly unchanged in Charleston, West Virginia and in Virginia Beach. Sales of retail space improved in Virginia Beach, weakened in Baltimore, and were unchanged in Washington D.C., with most of the activity in smaller spaces. A broker in Richmond reported that sales activity increased. Additionally, a contact in Charlotte stated that sales and sale prices rose since our previous report. A commercial real estate contact in Baltimore said that the market there has picked up; he noted that sales of office buildings increased downtown and that the medical office sector remained strong. A broker in Hampton Roads reported that condo construction and commercial sales have increased.\nAgriculture and Natural Resources\nSince our previous Beige Book, agriculture contacts reported improved business conditions. Farmers in South Carolina, North Carolina, and Virginia said that the previously wet conditions from the late spring improved, and in some cases reversed to dry conditions. A nursery executive in Virginia stated that the late arrival of spring weather had a small negative effect on planting timelines, but his six-month outlook is positive. Planting started for corn and soybeans, while hay harvesting has begun. Softwood and hardwood forestry products grew on trend. Low crop prices persisted for cotton, wheat, and soybeans, while corn prices continued to decline.\nNatural gas production was unchanged since our previous report and prices declined. Coal production decreased, although the pace of decline slowed in northern West Virginia. Coal prices were unchanged.\nLabor Markets\nSince our previous Beige Book, the demand for labor increased modestly. In particular, demand picked up for accountants, administrative professionals, IT workers, nurses, supervisors and managers, and skilled tradespeople. Typical seasonal hiring in leisure and hospitality has begun, according to a staffer in Maryland. On the outer banks of North Carolina, demand for these workers exceeds supply. A staffing agent in South Carolina said that employers were making hiring decisions more quickly and converting temporary workers to permanent with shorter tryout periods. Conversely, employment declined in West Virginia's coal and gas industries. Throughout the District, contacts reported problems finding employees with both hard and soft skills. For example, manufacturers in Virginia and South Carolina said it was difficult to find programmers and machinists, while employers in Virginia and West Virginia struggled to find employees with a good work ethic. Slight upward wage pressures continued throughout the District, specifically for those positions in highest demand. A Virginia resort manager said that tightening labor markets have put upward pressure on hotel workers' wages; he plans to raise wages again this summer. According to our most recent surveys, hiring in manufacturing and the overall service sector strengthened slightly, while average wages in both sectors rose moderately.\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 3, 2015\nBusiness contacts report mixed conditions in the First District. Retailers and manufacturers cite moderate revenue or sales increases from a year ago. Staffing firms' results range from \"strong\" low double-digit percentage increases to flat or down slightly, while software and information technology (IT) services firms' reports are less positive, including some revenue declines. Residential and commercial real estate market contacts cite little change since the last report. Product prices and input prices are reported to be generally steady. Contacts in software and IT services, staffing, and one in construction, say wage levels are increasing; most other employers say they are raising wages only selectively if at all. Hiring plans of responding firms remain subdued.\nRetail and Tourism\nFirst District retailers contacted for this round report year-over-year comparable-store sales increases between 1 percent and 5 percent, which some contacts say indicate better consumer sentiment.\u00a0 However, other contacts report seeing softer sales in specific regions or categories, such as men's and women's casual apparel. While they admit that these spotty softer sales may be transitory, a few respondents express less confidence than most contacts did in the last round, and one notes that the Conference Board's Consumer Confidence Index showed a substantial year-over-year drop in New England in April. Respondents say inventories are well managed and prices remain steady. Most contacts are still planning for additional hiring and capital spending, as they continue to expect improvement in the U.S. economy.\nBoston-area hotel occupancy rates were up 3.5 percent year-over-year in the first quarter. While April figures are not yet available, analysts expect strong hotel revenues based on the Boston Marathon and continued strength in business and leisure travel; forecasts for Memorial Day business and the high summer travel season are very strong. Attendance at museums and other attractions was down 12 percent year-over-year in 2015:Q1, but a good portion of this drop is attributed to the severe winter weather. Notwithstanding the extreme weather in the first quarter, international visitors were up about 8 percent year-over-year, and restaurant business was up 1.35 percent year-over-year.\nManufacturing and Related Services\nEleven of twelve responding manufacturers report stronger sales versus the same period a year earlier. The only firm to report weaker sales is a manufacturer of health and fitness equipment which attributed part, but not all, of the decline to strengthening dollar, discussed further below. A firm that owns an industrial distribution business indicates that sales in the energy sector and to customers dependent on energy like specialty steel have been slow. Our contact comments that the slowdown in oil and gas investment has been much bigger and faster than anyone anticipated. Our contacts do not report Europe as weighing as much on their sales as in previous rounds, but it is not yet a source of strength.\nHalf of respondents comment on the strength of the dollar and its negative impact on their sales overseas. A manufacturer of laboratory equipment says their sales would have been up 15 percent, not up only 7 percent, if not for currency changes. A tool manufacturer says that customers are delaying purchases to see if currency changes are permanent or temporary.\nContacts report the usual competitive pressures on their selling prices. On the input side, four manufacturing contacts report softness in pricing. Two contacts, a manufacturer of aerospace and defense equipment and a tool maker, used the word \"deflation\" to describe the market for their supplies.\nInventories appear to be stable with changes largely due to idiosyncratic issues. None of our contacts have revised their capital spending plans. The manufacturer of fitness equipment reporting slower sales says it may revise its capital spending plans if the weakness continues.\nEmployment is stable or higher for most firms. An exception is the manufacturer of fitness equipment who reports reducing its temporary workforce. The tool manufacturer says employment is up substantially because it has been \"on-shoring\"--moving production back to the United States from overseas. The company also says that the use of U.S. labor has \"resonated with consumers,\" leading to substantial market share gains and sales increases.\nThe outlook is positive for all of our contacts; they expect continued growth in the next few quarters. That said, no one views the current economic situation as a \"boom.\"\nSoftware and Information Technology Services\nFirst District software and information technology services contacts report \"mixed\" business activity in recent months, with total revenue ranging from down 4 percent to up 9 percent year-over-year. Contacts attribute softer business performance to overall uncertainty in the global economy, foreign currency depreciation in Europe and Asia, and a weaker-than-expected manufacturing sector. Two contacts note that an increased number of clients delayed project start times or downsized deals in recent months. Most firms are holding selling prices steady; one firm raised prices slightly. Capital and technology spending has largely remained flat. Two contacts report reductions in headcount in order to increase efficiency, while one firm added to headcount. Most firms are increasing wages by 3 percent to 5 percent, with increases concentrated in specialized, technical roles. Looking forward, contacts either maintain the same level of optimism or are slightly less optimistic than three months ago, expressing concern about the continued strong dollar and volatility in the overall macroeconomy.\nStaffing Services\nReports from First District staffing firms are varied, with some firms citing strong business growth in the low-double-digit range, and others reporting continued softness, despite weather improvements. All respondents indicate that labor demand has strengthened in recent months, with upticks in demand for both permanent and temporary labor. They also say that while overall labor supply has increased, it remains a challenge to identify and attract specialized, technical workers to meet client demand. However, some staffing firms are having more success than others in recruiting these highly-skilled workers. Contacts report that legal, paralegal, executive assistant, software development, engineering, and nursing roles are particularly difficult to fill. In response, firms continue to utilize referrals, LinkedIn, and other social media tools to attract top candidates. Both bill and pay rates have increased by 4 percent to 20 percent in recent months, with the steeper increases reflecting greater supply-demand imbalance. Looking forward, some contacts are optimistic, but others are concerned that growth will continue to be tempered by the mismatch between client demand and available labor supply. Some contacts also express uncertainty about continued growth in the overall economy and about the cost implications of the Massachusetts sick leave law.\nCommercial Real Estate\nReports from commercial real estate contacts in the First District are mixed. A Hartford contact had expected leasing activity to improve with the arrival of spring, but he reports that the improvement failed to materialize and leasing activity remains slow in each of the office, retail, and industrial sectors. However, Greater Hartford's investment sales market is experiencing robust demand and steady transaction volume. In Greater Boston, office leasing activity is holding steady at a solid pace and fundamentals are roughly unchanged. Also in Greater Boston, construction activity is steady at a brisk pace and the outlook calls for increased construction activity in the health care sector. Boston's office construction activity consists mostly of build-to-suit projects rather than speculative structures. In Portland, the vacancy rate is declining in the class A office market amid brisk leasing activity, and rents are expected to rise (if slowly) in each of Portland's office, retail, and industrial sectors in the coming year. In Providence, office leasing volume is described as decent and business sentiment is improving. According to one contact, scarcities of skilled construction labor relative to demand for such labor in the region--and associated wage increases--are starting to hinder additional construction activity.\nResidential Real Estate\nClosed sales of single family homes reported in April (reflecting sales under contract in February and March) were up on an annual basis in every state in the First District with the exception of Massachusetts, where the number of closed sales declined. While closed sales in Massachusetts have been lower than a year earlier in 7 of the last 11 months, the number of pending sales increased year-over-year in 25 of the last 26 months. Contacts attribute this pattern to an inventory shortage and strong consumer demand, stating that \"sellers may be more willing to let consumers out of contracted agreements if an inspection fails or financing falls through because they know another buyer will line up.\" Inventory in Massachusetts continues to decline, while building and zoning laws continue to make new construction difficult. Similar to Massachusetts, inventory decreased in every state in the First District except Connecticut. Pending sales have also increased in all six states, suggesting that closed sales will continue to rise in upcoming months. Median sales price increased in four states; the median price declined in Connecticut and was unchanged in Rhode Island relative to a year ago. Connecticut contacts state that decreases in the median sales price may be due to sales of distressed homes, which continue to work their way through the judicial system. Massachusetts contacts say that consumer demand plus inventory shortages have driven year-over-year increases in the median sales price for 29 out of the last 30 months.\nUnlike the single-family home market, the condominium market saw closed sales decrease in five of the New England states; New Hampshire was the exception. The median sales price for condos rose in Massachusetts and New Hampshire, remained unchanged relative to a year ago in Connecticut, and decreased in Maine, Vermont, and Rhode Island. Declining sales and increasing prices for condos in Massachusetts are attributed to inventory shortages, just as in the single-family home market; the Commonwealth currently has only 2.4 months of condo supply available. Condominium inventories decreased year-over-year in every state in the First District.\nContacts describe housing markets across the First District as very active. They say they expect buyer demand to persist through the spring market and into the summer.\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 3, 2015\nEconomic activity in the District expanded at a moderate pace during the reporting period of early April to late May. Overall price inflation firmed somewhat, while wage gains picked up a bit but remained moderate on balance. Retail sales and demand for consumer services grew moderately. Manufacturing activity was mixed but appeared to have been flat overall. Agricultural output expanded. Real estate activity strengthened, predominantly in the multifamily sector. Lending activity expanded, largely spurred by growth in real estate financing.\nPrices and Wages\nOverall price inflation firmed somewhat in the District during the reporting period. Prices for both health-care services and prescription drugs rose significantly. Leisure and hospitality contacts reported that prices in that sector have fully bounced back from their recession lows, and they expect continued growth throughout the remainder of this year. Low oil prices and the strong dollar reduced input and transportation costs for agricultural producers, putting downward pressure on prices in that sector, in general. However, prices increased noticeably for pork and poultry as a result of supply disruptions.\nWage pressures varied widely but increased somewhat on balance. Some contacts in the information technology sector reported rapid wage gains for workers with specialized skills, although other technology contacts reported more limited wage growth. In the construction sector, growing competition for skilled labor has created appreciable upward pressure on wages. Wage gains for lower skilled workers were mixed, with some contacts in the restaurant and hospitality industries reporting significant increases and others reporting limited upward pressure.\nRetail Trade and Services\nRetail sales grew at a moderate pace. Several contacts mentioned that low fuel prices provided a tailwind for consumer spending on other products. Automobile sales grew robustly relative to the same period last year, particularly for light trucks and SUVs. Consumers exhibited strong demand for entertainment and gaming products, and some contacts reported difficulties meeting this demand growth due to inadequate availability of skilled labor. Sales of food and beverages rose, but contacts noted a shift towards lower-priced products. Business investment spending in the retail sector held largely steady, with most investment activity aimed at enhancing productivity.\nDemand for business and consumer services grew further on balance. Sales expanded smartly for restaurants and hotels, particularly in Southern California, although one contact noted that fast food sales slowed slightly throughout the District. Demand for technology services continued to grow moderately, with expansion primarily evident for cloud computing, security, and data analytics products. Activity in the health-care services industry was strong with a few contacts citing the Affordable Care Act as a source of ongoing growth. Demand for legal services generally remained weak, and contacts reported that many new graduates in that field are either underemployed or working in other sectors. Capital investment among service providers was flat on balance during the reporting period.\nManufacturing\nActivity in the manufacturing sector was mixed but flat overall. Contacts in the biotech and pharmaceutical manufacturing industries reported strong growth and a record level of activity in mergers and acquisitions. Sales of semiconductors picked up a bit over the reporting period. Deliveries of commercial aircraft increased, but new orders fell significantly compared with the same period last year, suggesting slower demand growth ahead. Sources in the steel industry reported that global excess supply and a strong dollar continue to restrain demand for domestically produced steel. Sales of wood products in the District remained weak, reportedly due to weak demand from other parts of the country. Capacity utilization rates among various manufacturers were down from 2014 levels and remained well below long-term averages in some cases. However, capital spending for productivity enhancements grew further, with assorted contacts noting continued spending for new technology and equipment upgrades.\nAgriculture and Resource-Related Industries\nAgricultural output grew but conditions remained challenging in the resource extraction sector. Contacts reported excess supply and low prices for some agricultural products, notably potatoes and dairy, reflecting global competition and an appreciated dollar that has reduced exports. In contrast, demand for livestock, notably cattle, has been strong, keeping prices and profitability high. Growers of nuts and raisins also saw strong demand, propelled in part by an increase in exports that occurred despite the elevated value of the dollar. However, drought conditions continue to strain water resources, and contacts expressed concern that this could lead to a decline in fruit and nut production during the harvest season. Capital investment in the agricultural sector expanded at a modest pace, with most spending aimed at enhancing productivity. Resource extraction activity fell as low oil prices continued to depress drilling.\nReal Estate and Construction\nReal estate activity expanded on balance, led by strong growth concentrated in a handful of metropolitan areas. Construction of multifamily residential structures grew at a brisk pace, with some contacts reporting vacancy rates below those observed at the peak preceding the recession that began in 2007. Single-family home sales grew at moderate rate; one contact noted that high prices in the multifamily market have led young buyers to consider single-family units. Commercial real estate construction and leasing activity grew overall, with growth concentrated in a few areas with vibrant technology sectors. Shortages of skilled labor remained a constraint on construction activity in some fast-growth areas. Expanded construction activity spurred additional equipment purchases by construction companies, including some aimed at enhancing productivity.\nFinancial Institutions\nLending activity in the District rose moderately over the reporting period. Demand for commercial and industrial loans grew further, accompanied by significant increases in real estate lending in some areas. One contact reported increased hiring of loan originators, processors, and underwriters to meet growing demand for mortgages. Several sources reported that nonperforming loans declined and liquidity remained strong throughout the financial sector. However, regulatory constraints and low interest rates continued to exert downward pressure on net interest margins, and several contacts reported that some financial institutions relaxed their lending standards or began looking for new revenue streams. Capital spending was largely flat, with investments focused on equipment and software to enhance productivity or meet regulatory requirements.\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 3, 2015\nEconomic activity in the Eighth District has increased at a modest pace since the previous Beige Book. Recent reports of planned activity have been mostly positive on net with both retailers and auto dealers reporting increased sales. A survey of Eighth District businesses indicated that wages grew moderately, employment growth was modest, and prices charged to consumers were generally unchanged. Overall residential and commercial real estate market conditions improved in most parts of the District. A survey of District banks showed moderate improvement in overall lending activity. Finally, spring plantings in the southern portion of the District recovered thanks to drier weather.\nConsumer Spending\nConsumer spending grew at a modest rate since the previous report. In Little Rock, retailers and restaurateurs reported that seasonal sales and catering orders were higher than one year ago; a high-end jeweler reported that luxury goods are faring well and has made plans to increase inventories. In Memphis, a major sporting goods retail facility opened in late April. Multiple contacts in the hospitality industry report increasing travel demand in the District. However, the convention center in Louisville announced that it will close in late summer for two years for renovations and expansion.\nAuto dealers reported increased year-over-year sales, on net. About half of dealers reported selling more high-end cars than low-end cars; the rest reported no change in the composition of automobiles sold. While a majority of auto dealers reported that sales of SUVs or trucks increased relative to other models, a sizable minority stated that low gas prices had little to no effect on overall sales.\nManufacturing and Other Business Activity\nReports of plans for manufacturing activity have been mostly positive since our previous report. Several manufacturing companies reported plans to add workers, expand operations, and/or open new facilities, while a smaller number reported layoffs. Firms in transportation equipment, furniture, food and beverage, and machinery manufacturing plan to hire new employees and expand operations. In contrast, firms that manufacture wood products and primary metals reported plans to lay off workers or close facilities. News from plastics and rubber products manufacturers was mixed, with District firms reporting both positive and negative outlooks for hiring.\nReports of plans in the District's service sector have been mixed since the previous report. Firms that provide warehousing and storage reported new hiring and expansion plans. In contrast, several firms in air transportation and technical services plan to lay off employees. Firms that provide administrative services, truck transportation, and healthcare reported both layoffs and new hires.\nEmployment, Wages, and Prices\nSixty percent of contacts indicated wages were higher during the past three months than during the same period last year; the remaining contacts indicated that wages remained about the same. Half of contacts reported that employment during the past three months was unchanged from the same period last year, while 40 percent reported employment was higher or somewhat higher, and the remainder indicated a slight decline. Two-thirds of hiring managers are actively looking for employees, mainly for professional, technical, sales, and administrative positions. Fifty-eight percent of contacts reported that prices charged to customers were about the same during the past three months relative to last year, while 26 percent reported an increase in prices and 16 percent reported a decrease. The majority of contacts reported they are not raising prices to offset higher labor compensation costs.\nReal Estate and Construction\nHome sales increased in the Eighth District on a year-over-year basis. April 2015 year-over-year home sales were up 10 percent in Louisville, 11 percent in Memphis, and 16 percent in St. Louis. By contrast home sales decreased 8 percent in Little Rock. Contacts in the District expect the demand for single-family homes to stay the same or increase in the next quarter. Contacts noted that residential construction activity was slightly higher than in previous months and expect this trend to continue in the next quarter.\nCommercial and industrial real estate market conditions were positive throughout most of the District. Contacts across the District noted tight office market conditions in class A space. Contacts in Louisville noted that many firms have outgrown their current office space and expect rent growth to accelerate in the second half of 2015. Commercial and industrial construction activity continues to be positive throughout most of the District. Contacts across the District reported an increase in speculative industrial space.\nBanking and Finance\nA survey of District banks showed moderate improvement in overall lending activity over the past three months. For commercial and industrial loans, credit standards eased somewhat, creditworthiness of applicants improved, demand was slightly stronger, and delinquencies were lower. For residential mortgage loans, credit standards were unchanged, demand was modestly stronger, creditworthiness of applicants improved, and delinquencies were lower. For credit cards, standards were slightly higher, demand was lower, creditworthiness of applicants was mostly unchanged, and delinquencies were lower. For auto loans, credit approval standards were unchanged, demand was unchanged to slightly higher, delinquencies were lower, and creditworthiness of applicants improved modestly.\nAgriculture and Natural Resources\nDistrict agricultural bankers expect farm income, capital spending, farmland values, and cash rents to decline on a year-over-year basis in the second quarter of 2015. As of early May, District planting progress had recovered from weather-related delays experienced earlier. In particular, planting progress rates exceeded the 5-year average for corn, cotton, rice, sorghum, and soybeans. An Arkansas poultry farmer noted dark meat exports were down substantially. The farmer attributed the decline to international fears resulting from instances of the avian flu found outside of the District. District coal production continued to fall behind in April with 7.4 percent fewer tons produced than in the same month last year. Year-to-date production is 5.7 percent lower than at the same time last year.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Chicago

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"Beige Book Report: Chicago\nJune 3, 2015\nGrowth in economic activity in the Seventh District remained moderate in April and early May, and contacts expected growth to continue at a similar pace over the next six to twelve months. Consumer spending, business spending, and manufacturing production all grew moderately, while construction and real estate activity increased at a somewhat slower pace. Credit conditions improved some. Cost pressures generally changed little, with low prices for most raw materials and a slight increase in wages. Overall, crops prices fell and livestock prices rose.\nConsumer Spending\nGrowth in consumer spending was moderate in April and early May. Contacts reported strong sales in the restaurant, entertainment, and sporting goods sectors, while the seasonal pickup in home furnishings and lawn and garden equipment came in as expected. Relatively slower growth persisted in apparel and food and beverages. Sales at high-end and discount stores were stronger than at traditional middle-market stores. New and used vehicle sales continued at a strong pace, and the pace is expected to persist through 2016. Despite recent increases, relatively low gas prices continued to shift the sales mix from cars to light trucks and SUVs.\nBusiness Spending\nGrowth in business spending remained moderate. Most manufacturers and retailers reported comfortable inventory levels. Exceptions included steel service centers, where stocks remained elevated because of the large volume of imports in the beginning of the year, and auto dealers that sell high volumes of cars, where inventories were elevated because of the shift in demand towards light trucks. The pace of capital spending picked up somewhat and plans for the next six to twelve months continued to indicate steady growth in expenditures. Outlays were again primarily for replacement of industrial and IT equipment, though many contacts also reported spending for capacity expansion. Of those currently expanding capacity, most reported that increased demand was motivating the increase, though many also said the increase was a by-product of replacing obsolete equipment with newer capital. Employment growth picked up some since the last reporting period and contacts continue to expect moderate growth over the next 6 to 12 months. Many contacts said it was becoming more difficult to retain employees. In addition, a staffing firm reported steady demand for its services, with ongoing difficulty filling openings with qualified workers. Contacts continued to indicate that demand was strongest for skilled workers, particularly for many occupations in professional and technical areas and in skilled manufacturing and building trades.\nConstruction and Real Estate\nConstruction and real estate activity increased modestly on balance over the reporting period. Demand for residential construction ticked up across all sectors, but some contacts questioned whether the strong pace of multi-family construction can be sustained. Pent-up demand from the winter weather resulted in a modest increase in home sales despite a tight supply of new listings, particularly in the entry-level single-family market. Residential rents and home prices were up slightly. Nonresidential construction activity was somewhat higher, driven by demand for industrial buildings and offices. Commercial real estate activity grew at a strong pace, particularly in urban centers and select suburbs. Contacts reported that new hotel and office developments in downtown Chicago were forcing retailers to relocate, and that in the best locations retail rents and occupancy rates were at all-time highs.\nManufacturing\nManufacturing production continued to grow at a moderate pace in April and early May. The auto industry remained a source of strength for the District, with contacts citing improvements in the labor market and low gasoline prices as bolstering demand. Growth in the aerospace industry also remained strong. Capacity utilization in the steel industry picked up from the previous period as imports slowed. However, steel service centers' order volumes remained low. Specialty metals manufacturers reported slight gains in new orders, with the exception of those supplying the oil and gas industry, who continued to experience slowing orders. Sales of heavy trucks grew steadily, supported by low diesel fuel prices and improvements in the overall economy. Demand for heavy machinery continued to grow slowly, with steady demand for construction machinery offset by weak demand for agricultural and mining equipment. Manufacturers of construction supplies again reported slow but steady growth. Contacts across sectors with significant overseas exposure noted that the strong dollar was hurting sales.\nBanking and Finance\nCredit conditions continued to improve over the reporting period. Financial market volatility remained low and credit spreads declined slightly. Contacts reported a small uptick in business loan demand and credit line utilization from both small and large firms. Middle market loan demand was weaker, especially from those in the oil and gas industry, although demand for owner-occupied commercial real estate and equipment financing remained strong. Consumer loan demand flattened, except for mortgage originations, which increased slightly. Mortgage rates increased over the reporting period, leading to a decline in mortgage refinancing volume. Multiple contacts cited low home equity loan utilization as evidence that consumers are continuing to deleverage. Pricing competition for prime and super prime auto loans remained strong amid steady auto loan demand. Consumer credit quality improved slightly.\nPrices and Costs\nOverall, cost pressures changed little in April and early May. Energy prices were up slightly, but remained low. Steel and other primary metals prices also remained low, and retail prices were little changed. Food prices overall continued to decline slightly, and price increases for fresh meat and dairy products cooled somewhat. Wage pressures increased slightly. Some retail contacts noted higher minimum wages as well as the planned wage increases by major retail chains, while contacts across industries reported a willingness to raise wages when necessary to attract workers as well as to retain their most productive employees. Wage pressures continued to be more pronounced for high skilled workers than for low skilled workers.\nAgriculture\nCorn and soybean planting proceeded rapidly, exceeding the pace of last spring. The emergence of corn and soybean plants was generally ahead of the five-year average. Although precipitation has been adequate for most of the District, there were drought conditions in some parts of Wisconsin. The good start to the year raised expectations of a big fall harvest and helped push corn and soybean prices lower. Strong production pushed milk prices lower, yet some dairy product prices were higher, especially butter. Hog prices increased from their recent lows, as supplies became tighter due to a seasonal decline in production. Cattle prices remained high. Poultry flocks, especially egg layers in Iowa, were hit hard by bird flu, and egg prices increased in response.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Minneapolis

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"Beige Book Report: Minneapolis\nJune 3, 2015\nThe Ninth District economy showed signs of moderate growth since the previous report. Increased activity was noted in consumer spending, tourism, commercial construction, and professional services; residential real estate activity grew at a brisk pace. Activity was flat in manufacturing, residential construction, and commercial real estate, while activity decreased in energy and mining, and agricultural conditions were mixed. Labor markets tightened further since the last report. Wage increases remained mild, with some signs of increased wage pressures; with the exception of gasoline, prices were relatively stable.\nConsumer Spending and Tourism\nConsumer spending increased moderately. According to a recent survey of District business leaders conducted by the Minneapolis Fed, 40 percent of respondents noted that retail spending increased over the past three months, while 12 percent reported that sales had decreased. Recent same-store sales at a retailer in Minnesota increased slightly from a year earlier, and sales at a mall in North Dakota were about even with a year earlier. Vehicle sales in Minnesota in 2015 are expected to exceed last year's levels, according to an auto dealers association. However, retailers in the energy-producing areas of western North Dakota reported slower traffic and sales during the past two months, as drilling activity slowed.\nTravel and tourism increased from last year. Recent tourism activity was above year-ago levels in northwestern Wisconsin, according to an official. A travel agency in Minnesota noted that leisure travel bookings for March and April were up over 10 percent; summer bookings were looking strong with many higher-end trips planned. However, hotel occupancy rates in western North Dakota were lower than a year earlier, and passenger totals at North Dakota airports dropped 3 percent in March compared with a year ago.\nConstruction and Real Estate\nCommercial construction activity increased. In Sioux Falls, S.D., the value of April commercial permits increased from a year ago. In Billings, Mont., commercial permits significantly increased in value in April from a year earlier. Residential construction activity in the District was level overall. In the Minneapolis-St. Paul area, the value of April residential permits increased slightly compared with April 2014. In western North Dakota, recent residential construction continued at a solid pace. April single-family residential building permits in Billings decreased slightly in value from the previous year. The value of April residential permits in Sioux Falls decreased from a year earlier.\nActivity in commercial real estate markets was steady since the previous report. A commercial real estate analytics firm noted that first-quarter 2015 industrial and retail vacancy rates in Minneapolis-St. Paul dropped slightly from the end of 2014. Residential real estate activity increased at a brisk pace from a year ago. Compared to a year ago, western Wisconsin home sales increased 25 percent in April, and the median sales price rose 12 percent. Also, Minnesota home sales were up 20 percent in April, the inventory of homes for sale was flat, and the median sales price rose 12 percent. In the Sioux Falls area, April home sales were up 4\u00a0percent, inventory decreased 14 percent, and the median sales price increased 1\u00a0percent relative to a year earlier.\nServices\nActivity at professional business services firms increased since the previous report. For instance, a developer of training software noted a recent increase in sales, a recruiting firm noted that recent growth was faster than the pace of the past few years, and an architectural firm noted that recent bidding activity was stable. Rural hospitals and specialty clinics reported expansions in service offerings from a year ago. A hospital administrator in Minnesota noted that demand for services increased due to broader insurance coverage.\nManufacturing\nDistrict manufacturing was level since the last report. An index of manufacturing activity released by Creighton University (Omaha, Neb.) increased in April from the previous month in Minnesota and South Dakota; the index fell in North Dakota, but was at levels consistent with slight growth in all three states. A recreational vehicle maker announced plans for expansions in two locations, and a producer of truck accessories announced a facility expansion. Meanwhile, a plant that produces industrial gas-processing equipment shut down, citing reduced demand. Some contacts noted a deceleration in industrial capital investment in response to the recent increase in the dollar's exchange value. Among manufacturing respondents to the District business leader survey, 29 percent reported that the dollar's rise had decreased sales; however, most noted that sales were unchanged.\nEnergy and Mining\nThe slowdown in the energy and mining sectors continued. The District drilling rig count fell further since the last report. In a survey of District energy services firms conducted in March, 75 percent of respondents reported that revenues decreased compared with a year earlier, and half reported that capital expenditures decreased. Output at mines producing sand for hydraulic fracturing was expected to decline this year; one facility was idled in Wisconsin. Contacts noted that copper mines have cut planned capital expenditures. A Minnesota iron ore processing facility recently filed for Chapter 11 bankruptcy protection.\nAgriculture\nDistrict agricultural conditions were mixed in early spring. Progress in crop planting was well ahead of its five-year average in District states. While dry conditions persisted in some areas, drought conditions abated in much of the District owing to heavy precipitation in recent weeks. According to results of the Minneapolis Fed's first-quarter (April) survey of agricultural credit conditions, 79 percent of respondents said farm incomes fell in the previous three months, with a similar outlook for the second quarter. The outbreak of avian flu was expected to cost Minnesota turkey producers more than $300 million. Prices received by farmers in March decreased from a year earlier for corn, soybeans, wheat, hay, milk, chickens, and hogs; prices for eggs and cattle increased.\nEmployment, Wages, and Prices\nLabor markets tightened further since the last report. According to an ad hoc survey by the Minneapolis Fed, 39 percent of respondents reported that their ability to retain employees has decreased over the past 12 months, while 3 percent said it has improved. A survey of Minnesota small-business owners indicated that respondents expect hiring to be similar to last year. A survey of Minnesota manufacturers also found that hiring plans for the upcoming year are similar to a year ago, with about two-thirds of respondents expecting their staff levels to remain the same; attracting qualified candidates to fill vacancies was described as difficult by 71 percent of respondents, compared with 67 percent in last year's survey. A new distribution center in Minnesota is expected to employ 1,000 people, and a window maker plans to hire 300 workers as part of an expansion. In contrast, a food processing plant will temporarily lay off over 200 employees and a food manufacturer will lay off 100 workers. Online job openings in the energy-producing area of North Dakota were down 23 percent in April compared with a year earlier.\nWage increases remained mild, with some signs of increased wage pressures. About a quarter of respondents to the Minneapolis Fed's ad hoc survey were raising starting pay for most job categories to attract new hires. Three health care systems in Minnesota have agreed to a minimum wage of $15 per hour under recent contract agreements.\nWith the exception of gasoline, prices were relatively stable. Metals prices were about level since the previous report. However, mid-May Minnesota gasoline prices were about 30 cents per gallon higher than at the beginning of April but were still 75 cents per gallon lower than a year ago.\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 3, 2015\nOn balance, the Fourth District's economy expanded at a slight pace since our last report. Activity at manufacturing plants was mixed. Nonresidential building contractors reported a strong boost in activity; homebuilders saw a mild pickup in single-family starts during April following a slow first quarter. Retail sales were marginally higher than those of a year ago, while new car sales fell slightly year-over-year. Activity in the Marcellus and Utica Shales leveled out after a sharp decline in the first quarter. Most freight haulers indicated that volume has softened over the period. The demand for business and consumer credit continued to move slowly higher.\nPayrolls were little changed on net. Staffing firms reported a pickup in the number of job openings in healthcare, IT, and manufacturing. However, job placements did not keep pace because of difficulty in finding qualified applicants, especially for technical positions. Upward pressure on wages is limited to experienced and technically skilled personnel. Overall, input and finished-goods prices were steady. We heard reports about declines in prices for steel, beef, and dairy products, and rising prices for some building materials and diesel fuel.\nEmployment and Wages\nThe pace of hiring is expected to be modest across industry sectors this year, with some bias toward replacement. Newly created positions typically require a higher-level skill set than in the past. The average increase in wages and salaries is expected to be about 2 to 3 percent; however, firms are increasing wages in selected occupations at a much higher rate than for the labor market as a whole. High-skilled workers have enough confidence in the job market that they are not hesitant about moving from one employer to another. As a result, firms are increasing budgets for retention initiatives. Since younger workers show a greater propensity for changing jobs, several contacts indicated that they are increasing wages of new hires at a faster pace than for continuing employees in order to support retention of these workers. Firms typically are absorbing the higher labor costs as opposed to attempting a pass through to customers.\nManufacturing\nFactory contacts reported that demand was little changed during the past six weeks. Suppliers to the aerospace, motor vehicle, and construction industries continue to see strong or strengthening demand. One contact noted that his customers are returning to normal buying patterns since petroleum-based raw material prices began stabilizing. Factors tempering growth include exposure to weakening foreign markets, a downturn in the oil and gas industry, and a strong dollar. The near-term outlook for business prospects was mixed. While some producers expect strong growth, an equal number anticipate weakness or a decline compared to that of a year ago. The steel industry is still struggling because of declining prices, a strong dollar, and rising imports, especially from China. Nonetheless, the underlying domestic demand for steel was characterized as good, but flat. Steel producers and service centers see little change in the coming months. Year-to-date auto production at District assembly plants through April fell 3 percent below the prior year level.\nA sizeable number of our contacts indicated that they have increased their capital budgets over the period. Monies are being allocated primarily for equipment (machinery and IT) and maintenance projects. One manufacturer noted that anticipated changes to the tax code are a bigger impediment to capital spending than are interest rate increases. Input prices were mainly flat or lower. Contacts cited price reductions for iron and steel, petroleum-based products, and energy. Producers were reluctant to pass through lower input prices to customers.\nReal Estate and Construction\nYear-to-date sales through March of new and existing single-family homes were moderately higher as compared to those of the same time period in 2014. The average sales price rose about 7 percent. First-quarter single-family construction starts were down compared to those of a year-ago; however, builders reported that housing starts picked up in April. New-home contracts remain concentrated in the move-up price point categories. Prices are trending higher because of rising labor costs and lower existing-home inventory. Several builders commented that the market for spec homes exists, but because of capacity constraints and difficulty obtaining construction financing, it is difficult to increase their inventory. Despite this, homebuilders remain optimistic. They predict new-home sales for all of 2015 will rise on average about 15 percent on a year-over-year basis. Homebuilders also believe that the expectation of higher interest rates should serve as an impetus for potential buyers to sign purchase contracts. One builder remarked that while the labor market is strengthening, it is not yet at a point that will generate a significant number of new-home contracts.\nNonresidential contractors reported a strong boost in activity over the period, with a bias toward private work. On balance, the number of inquiries has increased. General contractors reported that their margins are increasing. Labor capacity was frequently mentioned as a factor that will restrain growth going forward. Backlogs were characterized as strong or strengthening. Demand is greatest for office space, industrial structures, multifamily housing, and university construction. Financing is more readily available to successful developers than it has been in the recent past.\nCapital spending by general contractors was mainly for technology, new equipment, and maintenance. Materials prices were stable during the past six weeks. Over the course of the year, builders anticipate input price increases of about 3 percent, primarily for concrete, wood, and fabricated metal products. Subcontractors remain busy. They are being challenged by a labor shortage and as a result are more selective when bidding. Subcontractors are pushing through rate increases, which they attribute to capacity constraints and a need to raise margins.\nConsumer Spending\nReports on retail sales were mixed. Contacts experiencing higher revenues over the period attributed them to lower gasoline prices and improvements in the weather and job market. That said, an apparel retailer noted that weak wage growth is a barrier to accelerated consumer demand. Some contacts reported that they are still being negatively impacted by residual effects of the west coast port strike. Product lines in highest demand included women's apparel, home furnishings, and health and wellness products. Same store revenues were marginally better than they were a year ago. Third-quarter sales are expected to be slightly above those of a year ago, with a higher rate of growth projected for on-line sales versus brick-and-mortar sales. Vendor and shelf prices were mainly stable. Restaurateurs reported rising demand by customers for more expensive, but locally produced products. Although there is downward pressure on beef and dairy prices, some food retailers have raised prices in response to rising employee healthcare costs. Capital spending was mainly for e-commerce operations and existing-store maintenance and remodeling.\nYear-to-date sales of new motor vehicles through April were slightly below those of a year ago. A strong consumer preference for SUVs and light trucks continued. New inventory is somewhat light because of production cutbacks. After lower-than-expected sales during the past couple of months, dealers are projecting strong sales during the summer and anticipate that unit volume for the year will be on par with that of 2014. Year-to-date pre-owned vehicle sales are moderately higher compared to last year's, a situation which was attributed to an increase in lease turn-ins. Credit unions and OEM captive finance operations are becoming more aggressive in financing new-car purchases.\nBanking\nBusiness loan portfolios expanded, but at a slow pace. Demand was strongest for C&I and CRE loans. Bankers reported that rising confidence in the economy provided the impetus for higher capital spending by manufacturers and moving ahead with construction projects. Some strengthening in consumer credit demand was reported. Auto lending remains strong, and there has been an increase in the use of home equity products. Interest rates for business and consumer credit were stable. Most of our contacts noted a seasonal increase in their residential mortgage business, which was heavily weighted toward new home-purchase. Delinquencies slowly trended lower from already low levels. No changes were made to loan-application standards. Core deposits remain strong. One banker observed that consumers and small businesses are cautious about borrowing and have learned the value of liquidity. Banks' capital spending was primarily for technology and building maintenance.\nEnergy\nLittle change in District coal production was reported. Spot prices for steam and metallurgical coal declined since our last report. The number of drilling rigs operating in the Marcellus and Utica Shales leveled out in April, after declining about 25 percent since late last year. Natural gas production remains at a high level, but the pace of growth is declining. We heard reports about a potential drop in wellhead prices as a result of storage levels above what is typical for this time of year. Otherwise, wellhead prices are holding within a narrow range. After adjusting capital budgets downward earlier in the year, spending is on plan, with monies being allocated mainly for maintenance projects and equipment. Reports indicate a more broad-based decline in prices for materials and equipment over the period.\nFreight Transportation\nReports on freight volume were mixed. While a few contacts continue to operate at high levels of capacity utilization, most freight haulers reported that volume has softened over the period. They believe that markets generally are not as robust when compared to the fourth quarter, and they cited the downturn in the steel, and oil and gas industries. Growth was seen in intermodal transportation and the transport of seasonal products. The outlook for the next few months is uncertain. Fleets continue to aggressively replace older equipment. Little change in costs was noted other than an increase in diesel fuel that was passed through via the surcharge. A strong pricing environment was attributed to capacity issues. A driver shortage continues to put upward pressure on the driver pay scale across the industry.\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 3, 2015\nThe Eleventh District economy grew at a slightly slower pace over the past six weeks than in the previous report. Manufacturers mostly reported steady or weaker demand. Retail sales rose at a weaker-than-expected pace but auto sales were generally strong. Demand for nonfinancial services improved, and real estate activity generally remained solid. Loan demand rose at a slower pace than in the prior reporting period. The energy sector continued to decline, while rainfall notably improved District agricultural conditions. Price pressures remained subdued and employment held steady or increased. Outlooks were mostly positive, but weaker in a few sectors compared with the prior report.\nPrices\nMost responding firms said prices held steady over the past six weeks. Manufacturers generally reported stable selling prices and input costs. Retailers and auto dealers noted steady prices, and staffing and professional and technical services firms said billing rates were unchanged since the prior report. Airlines reported lower fees and airfares. Leisure and hospitality contacts noted slower growth in costs, and a trucking company reported raising rates to cover increased labor costs.\nThe price of West Texas Intermediate crude oil and natural gas rose over the reporting period, but firms remained pessimistic in their outlook for 2015. Retail gasoline and on-highway diesel prices increased moderately as well.\nLabor Market\nEmployment in most industries held steady or increased, but there were reports of layoffs. Auto dealers, retailers and professional and technical service firms noted stable employment, except for one retail firm that reported hiring for new store locations. Airlines, staffing and transportation services firms reported slight increases in payrolls, and construction contacts continued to report a tight labor market. Some construction-related materials manufacturers reported layoffs due to weaker-than-expected demand. Two energy firms said that after cutting new hires, contractors and some employees, they were now using retirements to reduce staff.\nWages were mostly flat to up from six weeks ago. Contacts noted continued upward wage pressure for skilled workers in construction and high-tech manufacturing. Transportation manufacturers said healthcare costs were driving up compensation costs, and airlines, primary metals manufacturers and staffing and transportation services firms noted slight upward wage pressures. In contrast, a few firms reported reduced wage pressure and said it was easier to find workers due to layoffs in the oil fields.\nManufacturing\nManufacturers said demand was flat to down over the reporting period, but outlooks remained mostly positive. Demand for construction-related materials was flat. Unusually wet weather, particularly in the Dallas-Fort Worth area, delayed construction activity, but some weakening in demand in Houston was reported as well. Outlooks of construction-related manufacturers were weaker than the prior report. Primary metals producers reported steady demand, although one contact noted weaker-than-expected sales. Fabricated metals producers saw a drop in orders over the past six weeks, which contacts attributed to wet weather, the strong dollar and low oil prices. Food producers said demand was flat during the reporting period but up slightly from a year ago, with the exception of one contact who noted a sharp drop in sales.\nDemand for high-tech manufacturing softened over the past six weeks. Contacts noted continued slowing in sales of consumer electronics and communication equipment, and one contact said demand for personal computers remained weaker-than-expected. Contacts expressed concern about second-quarter outlooks, but were cautiously optimistic that overall growth would be positive this year. Demand for transportation manufacturing was unchanged over the past six weeks, but up from year-ago levels. Oilfield machinery sales remained weak and were significantly below year-earlier levels. One contact noted that oil and gas equipment manufacturers were actively seeking work from aerospace and other industries.\nGulf Coast refineries slightly increased operating rates, while chemical producers credited narrower margins and fewer sales to rising foreign production and the strong dollar. Outlooks remained positive, although the refining side of the business continued to be more profitable than chemicals.\nRetail Sales\nRetail sales increased at a slower pace than the previous reporting period and below contacts' expectations. Retailers attributed slowing growth to the strong dollar, which has crimped tourist spending, and to West Coast port congestion, which delayed shipments of seasonal goods. But one respondent added that business in general was slower than expected. Three national retailers said Texas sales underperformed the national average, while one national retailer said Texas was in line with the nation. Outlooks were optimistic and contacts expect overall sales to increase this year.\nAutomobile demand continued to be strong, although one contact said that sales were below expectations because of a slight slowdown in the local economy and unusually wet weather. Inventories were in good shape, and one contact noted that auto manufacturers were more confident in general and less worried about oversupply than they have been since the recession. Outlooks were optimistic.\nNonfinancial Services\nMost nonfinancial services firms reported a slight pickup in demand, and outlooks were more optimistic than in the prior report. Demand for staffing services was the strongest in Dallas, although some contacts said demand in Houston had improved since the last report. Finance, accounting, auditing, food service and hospitality were noted as areas of strength. Demand for professional and technical services rose slightly. A software programing firm continued to report strong demand, particularly in Houston and Austin. Accounting firms said tax business continued to wind down, but year-over-year growth remained robust. Law firms saw a decline in litigation activity and in demand from energy firms but increased real estate and financial work.\nSea and courier cargo volumes rose over the reporting period, while air and rail cargo volumes declined and reports from trucking firms were mixed. Outlooks among transportation services firms were positive. Airlines said passenger demand was unchanged over the past six weeks, but below year-ago levels. The outlook for domestic travel remained positive, while the outlook for international travel, particularly to South America, was weak. Leisure and hospitality contacts said demand growth slowed during the reporting period. Activity in and around major cities continued to be strong, while demand in oil-producing areas of South Texas and the Permian Basin slowed notably.\nConstruction and Real Estate\nHome sales continued to grow, but reports on the pace of growth were mixed. Contacts in Austin and Dallas-Fort Worth reported continued strong demand. Contacts in Houston saw continued strength in home sales at lower price points, but reported softening in sales of mid-priced new homes. Lot deliveries and new home starts were delayed in part due to unusually wet weather across much of the state. Apartment demand remained strong.\nCommercial real estate activity was generally strong, and outlooks were cautiously optimistic. Demand for office space was fairly solid, except for in Houston where leasing activity slowed and contacts noted an uptick in the level of sublease space. A few energy firms in Fort Worth are also seeking to sublease office space. Industrial and retail leasing and construction remained active, with industrial demand in Dallas-Fort Worth shifting from large to small and mid-sized tenants.\nFinancial Services\nOverall loan demand increased at a slower pace than in the previous report. Business lending generally slowed in the last month, largely driving this deceleration. Consumer lending, however, picked up for some contacts. Loans to auto dealers as well as consumer auto loans grew at a faster clip, and growth in mortgage lending ticked up. Commercial real estate loans continued to grow strongly, especially in Dallas and Austin. Default rates and charge-offs on loans were at all-time lows, indicative of strong loan quality. Deposit volumes fell at consumer lending-based banks, however, deposits at business lending-based banks continued to increase at a moderate pace. Net interest rate margins continued to squeeze bank earnings amidst tough competition and low interest rates. Outlooks deteriorated since the last report.\nEnergy\nThe rig count and demand for oilfield services fell in the Eleventh District, with losses concentrated in the Permian Basin. Outlooks remain negative, with most firms expecting a 30 and 40 percent drop in capital expenditures this year and further cuts in 2016. One silver lining is that contacts said industry costs continued to decline, with firms reporting 20 to 30 percent reductions in drilling and completion costs since the beginning of 2015.\nAgriculture\nSignificant rainfall across much of the district greatly improved soil moisture and pasture conditions and helped replenish ponds and lakes. However, wet field conditions prevented some producers in South Texas from planting crops by the insurance deadline, and the heavy storms in North Texas damaged some of the wheat crop. Prospects for the 2015 crop year are nonetheless strong, with above-average yields expected. Grain prices generally moved down and cotton prices remained below profitable levels for producers. The cattle sector continued to benefit from strong demand and historically high prices.\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/2015/2015-06-kc

"Beige Book Report: Kansas City\nJune 3, 2015\nEconomic activity in the Tenth District grew slightly overall in April and May but with mixed conditions across sectors. Consumer spending rose moderately, and transportation and wholesale trade firms reported stronger sales activity. District real estate activity continued to increase at a modest pace, with positive expectations for coming months. Professional and high-tech contacts noted a moderate increase in activity from previous months, and bankers reported a slight rise in loan demand and declining deposits. District manufacturing activity declined sharply, and substantial weakness in the energy sector persisted. Farm income levels declined from the previous survey period, although crop conditions improved. Prices rose slightly in most industries and wage growth was steady, with many firms indicating plans to increase wages over the next year.\nConsumer Spending\nConsumer spending activity rose moderately and remained higher than a year ago, with solid expectations heading forward. Retail sales picked up in April and May and were considerably higher than year-ago levels. Several retailers noted an increase in sales for building materials and home improvement products, while sales of luxury and custom-made items remained weak. Expectations for future sales were strong, and inventory levels were expected to pick up slightly. Auto sales increased moderately and were up compared to last year, with further growth expected in the months ahead. Dealer contacts noted a particular increase in sales of used vehicles, while sales of large trucks and SUVs slowed slightly. Auto inventories rose from the previous survey, and most contacts expected levels to continue to increase. Restaurant sales remained moderately weak and below year-ago levels, although contacts anticipated positive growth in coming months. District tourism activity was strong in April but moderately weaker in May as the winter season wound down and spring storms increased. Tourism contacts expected sluggish growth for the months ahead.\nManufacturing and Other Business Activity\nManufacturing activity declined sharply in April and May, while other business activity was considerably more positive. Manufacturing production contracted at the sharpest pace since mid-2009, and producers' expectations for future activity also fell moderately. The downturn was mostly attributable to declines in plastics, food, and aircraft production and further weakness in metals and machinery products. Production fell most sharply in energy-producing states like Oklahoma and New Mexico, but it was also down in most other District states. Manufacturers' capital spending plans fell from the previous survey, and export orders remained weak. Transportation and wholesale trade firms reported stronger activity than in the previous survey, with sales considerably above year-ago levels and solid expectations for future months. Professional and high-tech services contacts noted a moderate increase in sales from the last survey, and firms expected activity to rise steadily in the months ahead. Most transportation, wholesale trade, professional, and high-tech businesses reported solid capital spending plans.\nReal Estate and Construction\nDistrict real estate activity continued to increase at a modest pace in April and May, and expectations were positive for the coming months. Residential real estate sales increased moderately since the previous survey period, with low- and medium-priced homes outpacing sales of higher-priced homes. Home prices continued to make strong gains, and inventories fell at a modest pace. Expectations for sales and prices remained robust, and inventories were expected to decline further. Residential construction activity was unchanged as new housing starts and construction supply sales were flat. Builders and construction supply contacts expected a modest rise in residential construction activity in the coming months. Commercial real estate activity continued to increase modestly in April and May as vacancy rates decreased and absorption rates, completions, construction underway, sales and prices increased. The commercial real estate market was expected to strengthen at a modest pace over the coming months.\nBanking\nBankers reported a slight increase in overall loan demand, stable loan quality, and declining deposit levels since the last survey. Respondents indicated a slight increase in demand for residential real estate loans, while demand for commercial real estate, commercial and industrial, consumer installment loans and agricultural loans remained relatively steady. Most bankers indicated loan quality was unchanged compared to a year ago, and the majority of contacts expected it to remain the same over the next six months. Credit standards remained largely unchanged in all major loan categories. A larger number of respondents reported declining deposit levels compared to the last survey, principally in CDs.\nEnergy\nThe slowdown in the District's energy sector persisted and expectations remained cautious. The number of active oil drilling rigs declined moderately since the last survey period, and layoffs continued at regional oil and gas firms. Drilling activity was concentrated in more productive areas and in locations where drilling rights needed to be retained. Crude oil inventories at the key Cushing, Oklahoma storage hub finally began to edge down in May as oil production slowed slightly in some key producing areas. Oil prices rebounded somewhat in April and May, but most contacts expected prices to remain volatile for the remainder of the year. Several respondents said that if a further rebound in oil prices occurs and holds, drilling could ramp back up later this year, as technology and other efficiency gains within the industry have led to somewhat lower breakeven prices. Natural gas prices increased somewhat in mid-May as demand for electrical generation grew.\nAgriculture\nFarm income declined since the last survey period due to persistently low crop prices. Corn, soybean and wheat prices remained significantly below year-ago levels, dampening farm income expectations despite improved growing conditions due to timely rains. Reduced working capital and high input costs boosted demand for new farm loans as well as renewals and extensions on already-existing loans. District bankers also reported a slight rise in carry-over debt relative to last year. Although sufficient funds were available to meet increased loan demand, loan repayment rates declined and were expected to fall further in the next several months. Deteriorating financial conditions in the crop sector put downward pressure on non-irrigated and irrigated cropland values, but ranchland values remained strong amid positive profit margins for cow-calf operations.\nWages and Prices\nPrices in the majority of industries continued to grow slightly and wage growth was steady, with more firms planning to increase wages within the next year. Retail selling prices rose slightly, and restaurant menu prices continued to increase modestly. Manufacturers' raw material and finished goods prices declined at a slower pace than in the previous survey, and contacts expected prices to rise modestly in the coming months. Transportation input and output prices increased slightly, while construction materials prices declined modestly. Wages in the transportation and restaurant sectors rose modestly, while wages in retail were steady. Respondents continued to highlight shortages for truck drivers and auto technicians, as well as difficulty finding entry-level and sales staff. Contacts in most sectors said they expected labor costs to increase within the next twelve months.\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/2015/2015-04-su

"Beige Book: National Summary\nApril 15, 2015\nPrepared at the Federal Reserve Bank of Cleveland based on information collected on or before April 3, 2015. This document summarizes comments received from business and other contacts outside the Federal Reserve System and is not a commentary on the views of Federal Reserve officials.\nReports from the twelve Federal Reserve Districts indicate that the economy continued to expand across most regions from mid-February through the end of March. Activity in the Richmond, Chicago, Minneapolis, Dallas, and San Francisco Districts grew at a moderate pace, while New York, Philadelphia, and St. Louis cited modest growth. Boston reported that business activity continues to expand, while Cleveland cited a slight pace of growth. Atlanta and Kansas City described economic conditions as steady.\nDemand for manufactured products was mixed during the current reporting period. Weakening activity was attributed in part to the strong dollar, falling oil prices, and the harsh winter weather. Business service firms saw rising activity, especially for high-tech services, and they expect positive near-term growth. Cargo diversions resulting from labor disputes on the West Coast boosted activity at several East Coast ports. A majority of Districts reported higher retail sales, and they cited consumer savings from lower energy prices as helping boost transactions. Auto sales rose in most Districts. Tourism and business travel is rebounding from the harsh winter, with contacts expecting growth for the remainder of the year in corporate and leisure travel. Residential real estate activity was steady to improving across most Districts, although there was some slowing in housing starts due to abnormal seasonal patterns owing to the harsh weather. Multifamily construction remains strong. Activity in nonresidential real estate was stable or improved slightly across many Districts. Agricultural conditions worsened slightly. Factors contributing to these conditions varied by District, but included wet fields, persistent drought, and a harsh winter. Investment in oil and gas drilling declined, while mining activity was mixed. Banking conditions were largely stable, with some improvement seen in loan demand.\nLabor markets remained stable or continued to improve modestly. Layoffs related to the decline in oil and gas prices were reported in multiple Districts. Difficulty finding skilled workers was frequently reported. Districts noted modest upward pressure on wages and overall prices.\nManufacturing\nDemand for manufactured products was mixed during the current reporting period. Boston, Philadelphia, Atlanta, Chicago, Dallas, and San Francisco reported an increase on net, while some weakening was observed in New York, Richmond, St. Louis, and Kansas City. Gains in activity among aerospace firms were reported in the Cleveland, Chicago, and San Francisco Districts. Philadelphia, St. Louis, and Kansas City noted weakening in the primary and fabricated metal products industry, while their counterparts in Dallas reported growth. A slowing in the chemicals industry was observed in St. Louis and Kansas City, while chemical producers in Dallas cited lower prices and margins, and lower exports, which they attributed to the strong dollar. Weakness in the steel industry was seen in Cleveland, Chicago, and San Francisco. The auto industry remained a source of strength in Cleveland and Chicago. Contacts in Boston, Philadelphia, Richmond, and Dallas believe harsh winter weather had a dampening effect on activity. Boston, Cleveland, Chicago, and Dallas attributed some weakening in demand to a strong dollar, which increased the risk to international sales. One firm in Boston noted that the changing value of the dollar increases incentives to minimize inventories. Falling oil prices had a negative impact on new orders to energy supplier companies in Cleveland, Chicago, Kansas City, Dallas, and San Francisco. Some firms in Cleveland and Philadelphia noted heightened uncertainty due to anticipated weak demand from customers serving the energy sector. However, an oilfield machinery manufacturer in Dallas expects that the energy industry will begin showing signs of improvement in the second quarter. Capital spending plans were little changed in Boston and Cleveland, but they declined in Philadelphia and Kansas City. Richmond and Atlanta reported a slight increase in inventories, whereas Boston reported no significant changes. The overall outlook by contacts in Boston, Philadelphia, and Dallas is positive. However, in Cleveland and Atlanta, optimism regarding the outlook has waned slightly during the last six weeks. In Kansas City, producers' expectations for future activity moderated somewhat but remain slightly positive.\nNonfinancial Services\nNonfinancial services firms saw rising activity across all reporting Districts. A pickup in demand for high-tech services such as cyber security and web development was reported by contacts in Richmond, Minneapolis, Kansas City, Dallas, and San Francisco. Healthcare-related services are experiencing accelerating growth in Boston and Richmond. Dallas law firms noted more work in mergers and acquisitions, bankruptcies, and litigation. Sales were strong for accounting services in Richmond and Dallas. A rise in demand for architectural services was seen in Minneapolis and San Francisco. In Boston, government agencies started awarding more contracts to private-sector consulting firms, albeit with less assured funding. Service providers in Boston, Philadelphia, Kansas City, and Dallas have an optimistic outlook and expect positive near-term growth trends for their firms.\nDemand for transportation and freight services was mixed. Freight haulers in Cleveland reported that volume has declined from the high levels seen late last year. They attributed it to harsh winter weather and fallout from the labor dispute at California ports, which lessened shipments to the District. District port officials in Richmond noted stronger volumes over the reporting period. Diversions from the West Coast added to the volume. Coal exports continued to decline, while auto exports and imports remained strong. Reports on transportation activity in Atlanta were mixed. Contacts at East Coast ports cited significant upticks in cargo volumes as shipments were redirected from the West Coast due to labor disputes. Railroad cargo traffic, however, was described as flat to only slightly up compared with year-ago levels. The majority of Atlanta's logistic contacts anticipate higher growth for the year. In Dallas, sea, air, and courier cargo volumes were up over the reporting period, while rail cargo volumes were down. Air cargo contacts noted that volume growth in the international market outpaced that in the domestic market.\nConsumer Spending and Tourism\nThe Boston, Philadelphia, St. Louis, Minneapolis, and San Francisco Districts reported higher retail sales. New York, Richmond, Atlanta, Chicago, Kansas City, and Dallas reported that retail sales were mixed to slightly down, with colder-than-normal temperatures being mentioned as one possible cause. Cleveland noted that retail sales were flat year-over-year. Among retailers, the outlook was generally optimistic in Boston, Philadelphia, Atlanta, St Louis, Kanas City, and Dallas. Many Districts noted that savings from lower energy prices are helping to drive retail sales this cycle, as is the improving weather situation. Dallas retailers expressed some caution about the strength of the U.S. dollar, while New York noted that some retailers saw a falloff in Canadian shoppers due to the strong dollar. It was reported that consumer confidence in the New York District, albeit slightly lower, remains near its multi-year high, set in January.\nAuto sales rose in most Districts during the cycle period. Reports from Cleveland, Atlanta, and Chicago indicated that lower gasoline prices were causing consumers to shift from cars to light trucks or SUVs. New York and Philadelphia reported that sales had bounced back in March from the harsh winter weather in February. However, in Kanas City, auto sales slowed in March and were flat compared to last year. Dallas continues to see auto sales increase, but may see slowing demand growth later in the year, depending on the effect of the energy-industry slowdown and interest rate movements.\nTourism and travel started to rebound from the harsh weather seen in the winter months. Boston and New York reported tourism below levels seen a year ago. Boston noted that there are still ripple effects through many industries that are related to the bad weather this past winter, while Atlanta, St. Louis, and Kansas City reported positive and growing activity in their Districts. A few Districts noted that business travel and convention-center bookings are up. Atlanta mentioned that lower gasoline prices are a contributing factor to the rise in visitors driving to destinations. Minneapolis reported tourism activity as flat for the cycle; warm weather and the lack of snow brought an early end to winter tourism for several areas in this District. But summer bookings for hotels are up compared to last year. New York tourism activity has slowed somewhat in recent weeks. Theaters are experiencing weaker revenues, and occupancy rates and room rates in New York City are down from a year ago. All reporting Districts noted that corporate and leisure travel are expected to be up in 2015.\nReal Estate and Construction\nResidential real estate activity improved in the Cleveland, Richmond, Chicago, Minneapolis, Kansas City, Dallas, and San Francisco Districts, while remaining steady in all others, except New York, which reported softening conditions. Philadelphia, Cleveland, Atlanta, and Dallas reported a slowdown in construction activity due in part to harsh weather conditions. Low-to-declining levels of inventory were cited by contacts in Boston, Philadelphia, Cleveland, Atlanta, Chicago, and San Francisco. The Chicago District reported that inventories were near historic lows, particularly for lower-priced homes. Most Districts reported a tight supply of residential real estate in most price points of the market. The Philadelphia and Cleveland Districts reported that mid- to high-priced homes were selling better, while Chicago, Kansas City, and Dallas reported that low- to mid-ranged homes were outpacing other categories in sales. Cleveland and Philadelphia reported an absence of first-time homebuyers. Contacts across the system uniformly reported that they were optimistic and many expect a greater than normal upswing in home sales with the coming of spring. The multifamily sector remains strong, with flat to declining vacancy rates reported in multiple Districts. Boston, Cleveland, and San Francisco reported a continued shortage of skilled labor, which was cited as a factor driving up wages.\nCommercial real estate activity remained stable to expanding across many Districts. Boston, New York, Philadelphia, Chicago, Minneapolis, Dallas, and San Francisco all saw strong gains in industrial and office building construction. Demand for commercial properties in the city of Boston continues to be fuelled by foreign institutional investors, many of which are increasing their allocations to real estate. Contacts in Boston, Richmond, Atlanta, Minneapolis, and Dallas noted stable to strong multifamily construction. Chicago reported that leasing of industrial buildings, office and retail space all increased. Cleveland mentioned that successful developers have easier access to credit compared to prior years, and Boston reported a slight uptick in speculative activity for commercial construction.\nBanking and Finance\nBanking conditions remain positive across reporting Districts. On balance, demand for credit increased at a slight to moderate rate in Philadelphia, Cleveland, Richmond, St. Louis, Kansas City, Dallas, and San Francisco. Commercial real estate loan demand was strong in Atlanta and Dallas, while contacts in Philadelphia and Kansas City described CRE lending as stable. Demand for commercial and industrial loans grew slightly in St. Louis and Kansas City, while exhibiting stronger growth in New York, Philadelphia, Cleveland, and Chicago. Bankers in Atlanta reported that C&I lending in areas linked to the energy industry slowed as a result of oil-price declines. In San Francisco, some banks are building a sizeable pipeline of pending loans and have increased interest rates a bit in order to bring demand more in line with supply. Consumer lending grew in New York, Atlanta, and Chicago but was soft in Cleveland and San Francisco. Auto lending remained strong in Atlanta, Chicago, and San Francisco. One contact in Cleveland attributed weakened bank-financed auto lending to captive-finance operations that are becoming very aggressive. Residential mortgage demand--particularly for refinancings--grew in Richmond, Chicago and Dallas and was steady in New York. Home equity line volumes fell in Philadelphia and Cleveland. Bankers in the Philadelphia and Kansas City Districts expressed confidence in the quality of their loan portfolios, while New York and Cleveland noted that delinquencies were down or remained at low levels. Richmond reported that there was some loosening of credit standards, with one lender expressing concern that credit quality was declining as a result.\nAgriculture and Natural Resources\nAgricultural conditions worsened slightly across reporting Districts since the previous cycle due to a variety of conditions including wet fields, persistent drought, and a cold winter. Prices for corn and soybeans fell over the reporting period in the Atlanta, Chicago, Minneapolis, and Kansas City Districts. Chicago and St. Louis reported that less corn will be planted this year, being replaced by soybeans. Contacts in the Kansas City District noted that feeder cattle prices have improved. Contacts in Minneapolis reported turkey producers were concerned about an outbreak of an extremely virulent strain of flu that has killed thousands of birds. Input prices for the upcoming spring planting season were reported as increasing in Chicago. Drought conditions improved but still persisted in some areas of the Atlanta, Dallas, and San Francisco Districts, while wet field conditions slowed planting in parts of Richmond, Chicago, St. Louis, and Dallas. Falling pork prices were attributed to declining export demand, resulting in higher domestic supplies. Contacts in Chicago noted that beef prices remain elevated, but off their highs, due to cattle herds being rebuilt.\nReports indicated that energy market conditions declined in the Atlanta, St. Louis, Kansas City, and Dallas Districts. The number of active drilling rigs fell in Cleveland, Minneapolis, Kansas City, and Dallas. Active drilling rigs in North Dakota and Montana reached their lowest levels in five years. However, despite the decline in permits and new investment, overall production in the oil and gas sector remains strong to increasing. Oil and gas producers in the Cleveland, Atlanta, and Dallas Districts anticipate cuts in 2015 capital expenditures. Layoffs were reported in the Cleveland, Atlanta, and Kansas City Districts. Coal production declined year-over-year in the Richmond and St. Louis Districts but was mostly unchanged in Cleveland. Coal prices were reported as unchanged in the Richmond District, but declined in Cleveland. While producers are optimistic about continued production growth in oil and gas, layoffs are occurring in the industry as well as in coal.\nEmployment, Wages, and Prices\nIn most Districts, labor market conditions remained stable or continued to show modest improvement. Increases in hiring or employment levels were reported in the New York, Richmond, Atlanta, Chicago, St. Louis, and Dallas Districts. In Boston, only stronger-performing firms have made significant increases to employment levels, while payrolls in Cleveland remained generally stable. Several layoffs were announced by contacts in Minneapolis, and so changes to labor markets were described as mixed. Layoffs in the manufacturing and energy sectors were reported in multiple Districts including Cleveland, Atlanta, Minneapolis, Kansas City, and Dallas. These reductions were primarily related to the decline in gas and oil prices and the resultant decline in upstream demand such as iron ore mining and steel manufacturing. In Chicago, skilled workers continue to be in high demand. Firms in many Districts, including Richmond, Atlanta, St. Louis, Kansas City, and Dallas, reported having difficulty finding skilled workers, especially in professional and business services and the IT sectors. The Richmond, Atlanta, and St. Louis Districts specifically noted an increasing incidence of voluntary turnover of employees.\nModest or moderate wage pressures were reported in several Districts including New York, Richmond, St. Louis, Kansas City, and San Francisco. Wage pressures in Atlanta were muted. Wage pressures in Cleveland and Chicago were more pronounced for skilled workers. However, Chicago noted that there were more reports of wage increases for unskilled workers than in the previous reporting period. Contacts in San Francisco noted some seepage of wage pressures that had been limited to higher-end jobs in urban areas into middle-tier jobs and smaller towns. In the Minneapolis District, the strong wage increases observed in the energy-producing region over the past few years have slowed, and in some cases, declined. Retail sector wages in Kansas City experienced a mild decline but are expected to grow in the coming months.\nDistricts generally reported stable or modestly increasing overall price levels. Prices remained generally steady in the New York, Cleveland, Minneapolis, and Dallas Districts; while prices in Philadelphia, Richmond, Kansas City, and San Francisco increased slightly. In the Chicago District, input-price declines have been putting downward pressure on manufacturing prices, while retail prices have remained mostly unchanged. Aside from on-going energy-price increases associated with limited natural gas capacity in the region and the effects of the strong dollar, non-labor costs and prices in Boston remain steady. Retailers in Dallas noted increased transportation costs due to the West Coast port strike, while firms in several Districts mentioned lower transportation costs due to lower energy prices.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Boston

/beige-book-reports/2015/2015-04-bo

"Beige Book Report: Boston\nApril 15, 2015\nBusiness activity continues to expand in the First District, although contacts are not quite as upbeat as in the previous round. With a few exceptions, retailers, manufacturers, and selected business services firms report increases in revenue compared with a year earlier. For retail and manufacturing, the increases are fairly modest, while most consulting and advertising contacts cite moderate to strong results. Commercial real estate fundamentals continue to improve across most New England markets; residential real estate sales were slowed by severe winter weather, but contacts expect the effects to be temporary. Aside from ongoing energy price increases associated with limited natural gas capacity in the region and the effects of the strong dollar, contacts say non-labor costs and prices are steady. Only a few firms experiencing strong demand are doing any significant hiring; one retailer is raising its entry-level wages.\nRetail and Tourism\nRetailers contacted for this round report year-over-year comparable-store sales increases between 1 percent and 2 percent. A furniture store chain cites negative effects on sales in 2015:Q1 from the severe winter weather experienced in New England between late January and the first three weeks of February. Respondents say inventories are well managed and prices remain steady. One contact is raising its minimum hourly pay to remain competitive in the labor market in the wake of Walmart's well-publicized increase in minimum wages and to stay ahead of state and local regulations mandating higher minimum wages. Contacts say that consumers are generally more optimistic and that this sentiment will translate into higher 2015 sales.\nThe travel and tourism sector saw increased activity in January 2015 over January 2014, but lost business in late January and February because of severe winter weather. The weather conditions also had ripple effects for food suppliers, delivery workers, and wait staff. A contact estimates that restaurant revenues in the Boston area were down 30 percent to 40 percent during this period, reflecting lost traffic from corporate travelers, regional leisure travelers, and weekend business from local residents. Museums and other attractions were down 6 percent for 2015:Q1 compared to 2014:Q1. The good news is that, on balance, corporate and leisure travel is expected to be up again in 2015, leading to increases in room rates and occupancy rates in area hotels.\nManufacturing and Related Services\nEleven of twelve contacted manufacturers report higher sales than a year ago; the exception was a maker of hardwood furniture which saw an 18 percent year-over-year decline in sales. Although the firm attributes some of the weakness to this winter's severe weather, the decline prompted the permanent closing of several showrooms. For the firms reporting higher sales, increases are modest, generally in the low single digits, although several firms say sales growth would have been higher were it not for the weather, which in some cases prevented workers from getting to work and trucks from picking up shipments. For two firms, a manufacturer of postal equipment and an information services provider, small increases in sales were welcome after several quarters of declines.\nTwo issues emerged regarding pricing. The first is exchange rates. As was the case in the last round, most responding manufacturing firms say that the strong dollar means that profits from overseas sales are down significantly. The second pricing issue involves energy. Pipeline capacity for natural gas in the region has not kept up with increased demand in recent years, leading to increasing prices for both natural gas and electricity.\nFirms do not report any significant changes in inventories or to their capital spending plans. One firm notes that the changing value of the dollar increases incentives to minimize inventories as changes in exchange rates can lead to restatements. Another firm reports that historically low interest rates in Europe have led them to finance Euro-denominated capital expenditures by borrowing in Euros; in the past, they would have financed these expenditures using their U.S. credit lines.\nNone of our contacts report employment cuts and only one, a pharmaceutical company, cites significant hiring. Several contacts say they are hiring \"selectively\" or for \"critical skills.\" A producer of membranes cites \"process engineers\" as extremely difficult to find, but says other skills are not a problem.\nThe outlook is positive for all contacts except the furniture manufacturer whose sales declined in the first quarter.\nSelected Business Services\nConsulting and advertising contacts nearly unanimously cite increased revenues in the first quarter compared with last year. The exception is a government consulting firm that reports flat revenue in their core U.S. business year-over-year, but is up over the previous quarter as government agencies started awarding more contracts, albeit with less assured funding. Respondents in healthcare consulting say revenue growth is modest to strong, and all say demand is accelerating, as healthcare providers continue to seek operational performance improvements in response to implementation of the Affordable Care Act. A large marketing materials firm and small full-service advertising firm continue their moderate year-over-year revenue growth, in characteristically procyclical fashion. Strategy consultants cite robust revenue growth in the first quarter relative to a year earlier. Demand for private equity due diligence continues to grow, and strategic consulting is on the upswing as larger firms look to rebuild in the post-recession phase. Broadly, both consulting and advertising firms continue to experience strong demand growth for technology solutions and healthcare-related services.\nCosts remain stable for a government consulting contact and one strategic consultant. A small advertising firm and small strategic consultant cite moderate cost increases over last year, but have been able to maintain or slightly increase margins. All other contacts report mild cost increases, mostly in the form of compensation adjustments, and most are increasing margins. The government consultant and small strategy consultant mention strong price competition.\nAll responding firms plan on hiring in 2015, apart from a government consultant who plans to keep personnel flat in New England this year. Most planned hiring represents modest increases in employment, except that a small advertising firm and a particularly successful healthcare consultant plan to increase their employee base \"robustly.\" Contacts are planning for slight to moderate pay raises over last year, although technical positions such as information technology, coding, and web development remain hard to fill and demand premiums.\nMost consulting and advertising contacts express optimism about 2015 and several predict stable growth for the next three or more years. The election cycle is a common concern, as healthcare and government consulting contacts are directly affected by regulatory changes and policy decisions. A government consulting contact expresses worry about a trend of awards being granted increasingly to the lowest bidder rather than the most high-quality firm.\nCommercial Real Estate\nCommercial real estate fundamentals continue to improve in both Boston and Portland and are roughly flat in the Hartford area. One contact reports that office rents in Greater Boston are up an average of 7.9 percent over the year on the strength of high-demand submarkets such as Cambridge and the Seaport District. Strong sales activity for commercial properties in Boston continues to be fuelled by foreign institutional investors, many of which are increasing their allocations to real estate. Office construction increased modestly in the Boston area and includes a small, but increasing, amount of speculative activity. Multifamily construction is still increasing in metropolitan Boston but one contact says new completions may peak in 2015; construction in the hospitality and health care sectors is expected to increase in the coming year. One respondent reports that a scarcity of skilled construction workers is a nationwide problem that contributed to an increase in construction wages in excess of 20 percent in Greater Boston since 2010. In Greater Portland, two significant office buildings were sold in recent weeks at historically high prices. Also in Portland, the industrial leasing market is seeing increased demand amid limited supply and is expected to generate new construction activity moving forward. Hartford saw a weak first quarter that involved negative absorption of class A office space downtown, but one contact says the weakness reflects the harsh winter weather and likely will be reversed soon.\nResidential Real Estate\nClosed sales of single-family homes in February (reflecting sales under contract 30 to 60 days prior) increased year-over-year in Rhode Island, Maine, Connecticut, and Vermont, but declined in Massachusetts and New Hampshire. In Massachusetts, sales have declined year-over-year in eight of the last 10 months. Contacts attribute the decrease in sales to tight and declining inventories; only 3.4 months of supply are available in Massachusetts; supply in the Greater Boston area is at its lowest level in more than a dozen years. Contacts say zoning laws make new construction in Massachusetts difficult and assert that new listings--not very responsive to date to ongoing price increases--will not meet buyer demand. As in Massachusetts, inventory decreased in the other First District states when snowy weather buried the region. Median sales prices increased in four of the six states; Vermont saw no change in median price relative to a year ago and Connecticut saw prices decrease, possibly reflecting distressed homes, which continue to work their way through the judicial system.\nClosed sales of condominiums increased in February in New Hampshire, Connecticut, and Vermont, while decreasing in Rhode Island, Massachusetts, and Maine. Condo median sales prices rose in Massachusetts, New Hampshire, Maine, and Vermont while falling in Connecticut and Rhode Island. As in the single-family home market, inventory shortages are blamed for declining sales and increasing prices in Massachusetts condominium markets, where only 2.3 months of supply are available. As for single-family homes, condominium inventories decreased in all six New England states.\nContacts expect the spring market to be strong, although starting later this year owing to the harsh weather. Respondents anticipate that new listings will rise after owners repair winter damage and express hope that low interest rates continue to bring buyers to the market.\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 15, 2015\nGrowth in economic activity in the Seventh District remained moderate in March, and contacts expected growth to continue at a similar pace over the next six to twelve months. Consumer spending, business spending, and manufacturing production all grew moderately, while construction and real estate activity increased modestly. Credit conditions improved some. Cost pressures were generally little changed, although there were declines in some nonfarm raw materials prices. Prices of most agricultural commodities also fell.\nConsumer Spending\nGrowth in consumer spending remained moderate in March. Retail contacts reported slower spending early in the reporting period due in part to unseasonably cold weather, but spending recovered by the end of March. Non-auto retail sales increased modestly, with stronger growth in the home improvement, household goods and appliances, recreational equipment, sporting goods, and specialty gift sectors, and slower growth in the apparel and food and beverage sectors. In contrast, new and used vehicle sales increased substantially. Lower gas prices continued to promote the shift from cars to light trucks and SUVs. Contacts also noted continued strength in demand for recreational vehicles.\nBusiness Spending\nGrowth in business spending picked up to a moderate pace. Most manufacturers and retailers continued to report comfortable inventory levels. Exceptions included steel service center inventories, which one contact noted were \"bursting at the seams\" after a surge in imports at the end of last year, and some auto dealers, who reported lean light truck inventories because of greater-than-expected demand. The pace of current capital spending picked up somewhat and plans for the next six to twelve months continued to indicate steady growth in these expenditures. Outlays were again primarily for replacing industrial and IT equipment, though many contacts also reported spending for capacity expansion. Employment grew at a moderate pace and contacts expect this pace to continue through the rest of the year. A staffing firm reported steady demand for its services. In contrast, some manufacturers facing weaker demand reported cutting back on hours. Contacts continued to indicate that demand was strongest for skilled workers, particularly for those in professional and technical occupations and skilled manufacturing and building trades.\nConstruction and Real Estate\nConstruction and real estate activity increased modestly in March. Demand for residential construction grew slightly, with contacts reporting some new development in suburban areas. Sales of single-family homes also picked up, and contacts expected that buyer demand would continue to improve throughout the year. Home prices increased, residential rents held steady, and housing inventories remained near historic lows, particularly for the bottom end of the market. Contacts noted continued improvement in markets in low-income communities as real estate valuations and retail activity both increased. Nonresidential construction activity ticked up, driven in large part by demand for industrial buildings. Low interest rates supported a modest expansion in commercial real estate activity. Leasing of industrial buildings, office space, and retail space all increased and rents rose.\nManufacturing\nManufacturing production continued to grow at a moderate pace in March. The auto industry remained a source of strength for the District, with contacts again citing improvements in the labor market and low gasoline prices as bolstering demand. Growth in the aerospace industry was also strong. Capacity utilization in the steel industry decreased, as elevated service center inventories weighed on steel production. Most specialty metals manufacturers reported gains in new orders and solid order books, with the exception of those supplying the oil and gas industry. Contacts also noted that the strong dollar was increasing import competition. Sales of heavy trucks and machinery both grew slowly, with demand for agricultural and mining equipment remaining weak. Manufacturers of construction industry equipment and supplies expect steady growth in 2015.\nBanking and Finance\nCredit conditions improved some over the reporting period. Financial market volatility stabilized and credit spreads declined slightly. Banking contacts noted an increase in business loan demand and an uptick in credit line utilization, especially from middle market and large corporate firms. Loans for owner-occupied real estate and equipment financing were significant sources of growth. Consumer loan demand also grew steadily. Low rates continued to spur mortgage activity, particularly for refinancing. Auto loan demand remained strong, with contacts noting continued strong competition for prime and super prime auto loans.\nPrices and Costs\nOverall, cost pressures were little changed in March. Energy prices were up slightly, but remained low. Steel and other primary metals prices declined, but contacts did not expect much further change in prices one way or the other in the near term. Some manufacturers reported that the decline in input prices created downward pressure on their prices. Retail prices were little changed. Most food prices declined slightly, with the exception of meat and dairy. Promotional activity at non-auto retailers increased slightly, while auto dealer incentives were little changed. Wage pressures increased slightly, while non-wage costs declined a bit as lower raw material costs outweighed increases in the cost of benefits. Wage pressures continued to be more pronounced for skilled workers than for unskilled workers, although there were more reports of wage increases for unskilled workers than in the previous reporting period.\nAgriculture\nHigh stocks of corn and soybeans and slower export growth put downward pressure on most crop prices. Stockpiles of crops from last year's good harvest started moving for sale amid concern about low future prices. Wet fields in some areas and a cold winter have prevented most fieldwork from beginning. Still, generally favorable conditions should allow rapid planting once temperatures rise. Although higher input costs were encouraging farmers to shift some acreage from corn to soybeans, corn still looks profitable in some parts of the District, and many farmers continued to prefer their normal crop rotations. Higher output of milk has put downward pressure on prices, leading many farmers to lock them in anticipation of possible further declines. Hog prices fell because so many were brought to market, while cattle prices were up as herds are being rebuilt.\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 15, 2015\nOutside of manufacturing, the Fifth District economy grew at a moderately faster pace in the weeks since the previous Beige Book. In manufacturing, shipments and new orders fell as winter weather forced shutdowns. Retail sales rose at a slower pace. However, revenue growth increased moderately at non-retail services firms, along with stronger tourism activity. Loan demand grew modestly. Residential and commercial real estate markets also continued to strengthen. Agricultural contacts reported seasonal increases in activity. Labor markets generally improved.\nAccording to the most recent surveys, manufacturing and service sector employment rose at a slightly faster pace since the previous Beige Book report. Average wages in the manufacturing sector continued to rise at a tepid pace, and in the service sector, wage growth moderated somewhat. Manufacturing prices paid and prices received rose slightly faster. Retail prices increased more quickly and price increases in the non-retail service sector remained mild. Energy prices softened.\nManufacturing\nDistrict manufacturing contracted since the previous report. Shipments and new orders fell, while inventories of finished goods and raw materials rose somewhat faster in recent weeks. Several manufacturers attributed the decline in activity to adverse weather. A food manufacturer in North Carolina reported plant shutdowns and a textile manufacturer scaled back production due to a shortage of electric power during the cold weather. In contrast, a specialty producer of heavy construction products reported steady shipments despite a \"rough winter.\" A few manufacturers noted delays in receiving components coming through the West Coast ports as a result of dockworker issues. Prices paid and prices received rose slightly faster than in the prior report.\nPorts\nDistrict port officials reported stronger volumes in the weeks since our last report. One port had to briefly close to intermodal traffic during a winter storm. Diversions from the West Coast added to volume, such as a sharp rise in imports of retail products destined for the Ohio valley and grain exports from the Midwest. New contracts for West Coast dockworkers are expected to lead to reduced congestion at District ports. Coal exports continued to decline, while auto exports and imports remained strong.\nRetail\nRetail sales rose at a slower pace since our previous report. Sales were down, according to various merchants, including an appliance store executive, a hobby shop manager, and a gas station owner. However, retailers of construction materials and home and garden suppliers reported strong revenue growth. The manager at a discount department store said sales were meeting planned levels. Sales of cars and light trucks were \"pretty good,\" according to a dealer in the Washington beltway area. Retail prices rose somewhat faster since the prior report. A large food supplier remarked that beef prices rose to an elevated level, while pork and poultry prices fell to very low levels.\nServices\nServices firms reported moderate revenue growth since the previous report. Sales were especially strong for accounting services, telecommunications, and cybersecurity firms. An executive at a healthcare organization said demand for services has been very high for several months, with no sign of abating. A financial services executive reported that clients are feeling better about the economy and have increased the risk levels in their portfolios. A contact at national trucking firm located in the District indicated little change in business activity, but expected stronger conditions in the second quarter. Prices at services firms rose at nearly the same rate as in our previous report.\nContacts in the tourism industry reported stronger group bookings in recent weeks. A large increase in group bookings more than offset a decline in the leisure category, according to a Virginia hotel manager, and capital spending rose at the resort. An executive at a North Carolina hotel reported that convention and group business increased year-over-year and he expected strong summer bookings despite new competition in his region. A South Carolina hotelier also reported a significant year-over-year increase in occupancy and a North Carolina hotel manager reported strong revenue growth supported in good measure by military and corporate bookings. In western Virginia, a resort hotel manager said this winter's revenues were above the record-setting revenues of a year ago, in part due to extended cold weather. As a result, the resort has been able to start new capital projects. A tourism executive on the outer banks of North Carolina said weekends have been strong since our previous report, with big events and good weather helping to draw tourists. In addition, construction of large rental properties has recently increased in that location. Room rates and rental rates were mostly unchanged, according to our contacts.\nFinance\nLoan demand rose modestly since our previous Beige Book. Residential mortgage demand increased in Maryland, South Carolina, and Virginia. Growth in residential mortgage lending in Maryland and Virginia was largely attributed to increased refinancing activity. In North Carolina, loan demand was reported to be soft; however, a lender in Charlotte expected a robust spring buying season due to pent-up demand. Commercial lending also picked up in Maryland, South Carolina, and Virginia. A banker in Maryland noted an increase in requests to finance the purchases of commercial properties by the current tenants of those properties. Also, a North Carolina CFO said that most new speculative building was being funded with private equity rather than with bank loans. Competition among banks remained high throughout the District. A lender in High Point, North Carolina said that larger banks have started to compete more directly against local community banks for real estate loans. Contacts throughout the District noted some loosening of credit standards and a lender in Maryland expressed concern that credit quality was declining as a result.\nReal Estate\nActivity in residential real estate continued to increase modestly since our prior Beige Book. Sales increased in Washington, D.C., North Carolina, and South Carolina. A Realtor in D.C. noted a slight increase overall, with a significant rise in the number of sales of high-end homes. Additionally, several contacts throughout the District expressed optimism about housing conditions normalizing and pent-up demand being released in the spring. A Richmond contact remarked that the real estate market seems a little tighter in the mid-range market, while a lot of inventory exists on the high end. On the other hand, a Baltimore-area Realtor commented that he had \"not seen any movement in the past 30 days.\" Also, a Maryland executive said that demand softened for new construction homes. Average days on the market varied. For instance, the number of days rose in Washington, D.C. but fell in North Carolina. Inventories decreased in the Carolinas and were unchanged in D.C. but remained at historically low levels. Lot sales increased in North Carolina, along with speculative home building projects. An executive in South Carolina said lot prices increased and might hinder transactions.\nCommercial real estate activity increased moderately since our previous Beige Book. Retail leasing rose in Virginia, primarily driven by demand for restaurant space, value fashion stores, and food stores. A Maryland contact reported that retail space in grocery-anchored locations has commanded higher rents. Demand in the District has picked up for health care space, executive offices, and residential real estate offices. In Maryland, stronger demand was largely driven by government contractors. According to a Realtor in Virginia, vacancy rates for retail space declined while office vacancy rates increased slightly as tenants formerly in large spaces moved to smaller spaces. Another Virginia Realtor said that limited new commercial space had come online, keeping vacancies stable to slightly lower. In North Carolina, vacancy rates decreased for retail, office, and industrial spaces. Throughout the District, there was new construction of multi-family residential buildings, hotels, and medical centers. A South Carolina contact cited concerns of some overheating in 1-4 unit multi-family development. A Virginia Realtor said that new apartment supply continues to be absorbed, with new projects continuing in Norfolk and Richmond.\nAgriculture and Natural Resources\nSince our previous Beige Book, agriculture contacts in the District reported seasonal increases in activity, although adverse weather was causing some disruptions. Orders increased for sod, trees, and shrubs; however, wet weather delayed harvesting to fulfill those orders. A farmer in South Carolina said that the ground was too wet to plant anything right now, potentially reducing crop yields in the fall. Crop prices were unchanged for sod, trees, and shrubs, and prices remained low for corn, cotton, wheat, soybeans, and peanuts.\nCoal production increased slightly since our previous report, largely due to the effects of harsh winter weather on coal demand; however, production was lower than in the same period last year. Coal prices were unchanged since our last Beige Book. Production of natural gas decreased slightly in response to prices, which remained historically low, except for a brief spike in prices due to the cold weather.\nLabor Markets\nThe demand for labor generally increased since our previous Beige Book. Positions were recently added in banking, manufacturing, engineering, health services, IT, transportation, and agriculture. Demand picked up for skilled manufacturing workers, managers and supervisors, and high-level IT and biotechnology professionals. Increased turnover was also widely reported in the District. A Maryland executive and two large companies in North Carolina reported increased turnover due to employee willingness to look for other opportunities. Difficulties finding employees were reported in banking, trucking, and biotech. Conversely, large manufacturers in North Carolina said they were having fewer problems finding workers due to partnerships with local universities and trade schools. Recently, upward wage pressures broadened slightly according to several District contacts, including for IT workers, accountants, and bankers. However, a northern Virginia executive said that downward wage pressures persisted in the defense and aerospace industries. According to our most recent surveys, manufacturing employment grew marginally and average wages increased modestly. In the service sector, hiring rose slightly while wage growth moderated.\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 15, 2015\nOn balance, the economy in the Fourth District expanded at a slight pace during the past six weeks. Activity at manufacturing plants was mixed. In residential real estate markets, unit volumes and single-family home prices rose; nonresidential construction fell below levels seen during the prior few months. Retailers and auto dealers reported marginally higher sales than a year ago. Spending for new drilling in the Marcellus and Utica Shales has been significantly curtailed. Freight volumes were lower due primarily to the effects of lingering cold weather and West Coast labor disputes. The demand for business credit continued to slowly move higher, while demand for consumer credit softened.\nPayrolls were little changed on net, although construction contractors expect brisk hiring in the second quarter. Bankers are expanding payrolls in the areas of risk management and commercial lending. Staffing firms reported a pick-up in the number of job openings and placements in the health care, IT, and manufacturing industries. Upward pressure on wages is limited to experienced and technically skilled personnel in construction and freight hauling. Overall, input and finished goods prices were steady. We heard reports about declines in prices for agricultural commodities, oil, and steel, and rising prices for some building materials.\nManufacturing\nFactory contacts reported mixed activity during the past six weeks. Suppliers to the aerospace, motor vehicle, and construction industries continue to see strong or strengthening demand. Some producers of consumer products reported that new orders are slowly rising. Manufacturers experiencing weakening demand attributed it to a retrenchment in the oil and gas industry and a strengthening dollar. On balance, our contacts are less bullish about near-term business prospects compared to earlier in the first quarter. Factors tempering growth expectations include exposure to foreign markets and uncertainty about the direction of oil and gas prices. Reports from steel producers indicate that the industry's downturn may be waning. One contact noted that demand from the construction sector is starting to pick up. Another said that demand for tubular products from oil and gas customers is still particularly weak, although inventory is slowly being absorbed. Price pressures affecting steel that are associated with the downturn in oil prices and the rising dollar have been significant, but some contacts believe the pressures are close to bottoming out. Year-to-date auto production at District assembly plants fell almost 7 percent.\nCapital spending remained on plan for the most part. Deviations were in response to changes in customer demand--higher or lower. Monies were allocated primarily for maintenance and new equipment. Aerospace suppliers are increasing their R&D budgets. Raw material prices declined, particularly for agricultural commodities, oil, petroleum-based products, and steel. Producers were reluctant to pass through lower input prices to customers. On balance, manufacturing payrolls were steady.\nReal Estate and Construction\nYear-to-date sales through February of new and existing single-family homes rose 3 percent compared to the same time period in 2014. The average sales price was about 6 percent higher. Construction starts were down slightly. Homebuilders reported that business traditionally begins to pick up late in the first quarter, and March sales matched their expectations. New-home contracts were concentrated in the move-up price-point categories; prices increased recently due to higher land and labor costs and lower existing-home inventory. Several builders commented that their spec-home inventory is at a low level, which they attributed to capacity issues and difficulty in obtaining construction financing. Homebuilders remain optimistic. They believe the potential for higher interest rates might serve as an impetus for potential buyers to sign a purchase contract.\nSeveral general contractors reported a slowing in nonresidential construction due to lingering cold weather. Nonetheless, inquiries have been coming in at a steady pace, and backlogs were characterized as normal. Demand is greatest in commercial building, healthcare, higher education, and public infrastructure. Credit is more readily available to successful developers than it has been over the past few years. Capital spending by general contractors was mainly for technology, new equipment, and maintenance. Our contacts, while optimistic about short-term growth prospects, are concerned about potential labor shortages.\nMaterials prices were stable apart from increases for concrete, drywall, and finished wood products. Diesel fuel and structural steel prices were lower. Payroll growth remained flat due to the harsh winter weather. As the spring season progresses, general contractors expect a period of fairly robust hiring, including craft workers, project engineers, and managers. Wage pressure is building across the industry. Subcontractors are busy, and they are pushing through rate increases to cover rising costs, including for labor, and to widen margins.\nConsumer Spending\nOn net, retail sales were flat during the past six weeks when compared to the post-holiday period. Same-store revenues were marginally better than a year ago, which contacts attributed to the winter weather being less harsh this year. Two retail chains reported that their revenues were adversely affected by labor disputes at California ports. Product lines in highest demand included women's apparel and health and wellness products. Contacts are hopeful that lower gasoline prices will have a greater impact on consumer spending, which would help boost second-quarter sales to levels above those in 2014. Vendor and shelf prices were steady. Beef prices have fallen from historic highs but remain elevated. Retailer's capital spending was mainly for updating existing stores, and their payrolls were flat.\nYear-to-date new motor vehicle sales through February were slightly higher than those of a year ago. Sales began to pick up in March with the warmer weather. One contact reported that consumer preferences have been shifting from cars to SUVs and trucks, which is boosting transaction prices for dealers and margins for manufacturers. Looking at 2015, dealers expect sales will remain strong, but they believe that total domestic sales will flatten out at 2014 levels. New inventory is slightly elevated due to February's lower unit volume. Used vehicle transactions showed a modest increase over last year. Dealers are starting to hire seasonal sales personnel, while service departments are feeling wage pressures due to a lack of qualified mechanics.\nBanking\nBankers reported that their business-loan-portfolio growth was flat to moderate. Any easing in demand was attributed to seasonal factors and the weather. Credit applications were strongest for C&I loans and multifamily-construction financing. Consumer credit demand softened. A regional banker reported that he has not seen a pass through of savings due to lower gasoline prices to higher consumer spending or loan applications. However, his core deposits grew about 8 percent year-over-year across a broad set of consumer accounts. Direct auto lending has softened at some banks, as captive-finance operations are becoming very aggressive in financing new car purchases. Several bankers reported flat to declining balances on home equity products. Many of our contacts noted a slowing in their residential mortgage business, which was attributed to the weather and a dwindling inventory of homes. Refinancing activity was down. Delinquency rates held steady, at very low levels, and bankers expect little change going forward. No changes were made to loan-application standards. Capital spending by banks was primarily for technology, including cyber security, and branch maintenance. Payrolls expanded, on net. Hiring was for jobs in commercial lending and risk management.\nEnergy\nLittle change in District coal production was reported. Spot prices for metallurgical and steam coal declined since our last report. Shale gas activity was mixed. While drilling has been curtailed--the number of drilling rigs across the District declined 25 percent since mid-December--production remains at high levels. One industry executive reported that even with the current low prices for oil and natural gas, there is still a lot of industry optimism surrounding the Marcellus and Utica Shales. Capital spending has been pulled back, especially by upstream companies. One contact reported that his firm has cut its capital budget by 40 percent year-over-year. Pricing for materials and equipment was flat to down. Layoffs by oil and gas companies and their supplier industries were reported.\nFreight Transportation\nFreight volumes declined since our last report. Contributing factors include the harsh winter weather that lingered into early March and fallout from the labor dispute lessening shipments from the California ports. Our contacts reported that with improving weather conditions, volumes are slowly returning to the high levels seen late last year, though the effects of the labor dispute are expected to persist for several quarters. Little change in costs was noted other than the downward trend for diesel fuel and petroleum products. In a few cases, fuel surcharges were lowered. A strong pricing environment was attributed primarily to capacity issues. Capital spending in 2015 is projected to be strong. Several carriers decided to order replacement equipment earlier in the year than originally anticipated. Some reports indicated that monies are being allocated for footprint expansion--terminals, aftermarket parts production, and service facilities. Hiring is for replacement and to add capacity. Difficulty in attracting and retaining drivers and maintenance technicians is putting significant upward pressure on wages for both job categories.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

St Louis

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"Beige Book Report: St Louis\nApril 15, 2015\nEconomic activity in the Eighth District has increased at a modest pace since the previous Beige Book. Recent reports of planned activity have been mixed. On net, reports from the manufacturing sector have been negative and reports from the service sector have been positive. Overall residential real estate market conditions continue to improve in most parts of the District, while conditions in the commercial and industrial real estate markets and construction have been mixed. Total lending at a sample of small and midsized District banks has increased modestly since the first of the year. Finally, plantings are off to a very slow start in southern District states due to wet weather conditions.\nConsumer Spending\nRetail and restaurant sales grew moderately in the Eighth District during the reporting period. Several retailers throughout the District reported growth in year-over-year sales. Multiple retailers expect sales growth will continue throughout 2015. A major sporting goods retailer is slated to open a megastore in Memphis in the upcoming months. Several restaurant owners cite growing consumer demand as their reason for expanding their business. Openings were announced throughout the District in the retail, grocery, discount store, and apparel sectors. Contacts in Louisville report growing tourism activity related to convention center bookings.\nManufacturing and Other Business Activity\nReports of plans for manufacturing activity have been negative on net since our previous report. Manufacturing companies in furniture, transportation equipment, and plastics and rubber products reported plans to add workers, expand operations, and/or open new facilities in the District. However, large layoffs were reported in the primary metals and chemicals sectors. News from food manufacturers was mixed, with District firms reporting both positive and negative outlooks for hiring. Reports of hiring plans in the District's service sector generally have been positive since the previous report. Firms that provide warehousing, storage, health care, social assistance, and business support services reported new hiring and expansion plans in District states. In contrast, several firms in air transportation, truck transportation, and advertising services plan to lay off employees.\nReal Estate and Construction\nResidential activity continues to improve in most parts of the District. Home sales increased in the Eighth District on a year-over-year basis. Compared with the same period in 2014, February monthly home sales were up 13 percent in Little Rock, 15 percent in St. Louis, and just under 1 percent in Louisville. Monthly home sales declined 6.5 percent in Memphis compared with one year ago. Residential construction in February decreased in the majority of the District's metro areas on a year-over-year basis. Compared with the same period in 2014, February monthly single-family building permits increased 10 percent in Louisville, 21 percent in Little Rock, and 11 percent in St. Louis. Permits decreased 7 percent in Memphis.\nCommercial and industrial real estate activity was mixed throughout most of the District. Contacts in Memphis reported little to no available industrial real estate space in West Memphis, but plenty of available space in Memphis and northern Mississippi. A hotel in downtown St. Louis will be closing in May. Contacts in Little Rock reported stable occupancy in downtown Little Rock, but no significant new office space construction. There are multiple industrial construction projects in the works in Louisville, including plans for two new automotive supplier facilities. Contacts in Memphis reported continued activity in the grocery chains sector; ground just broke for a major store in DeSoto County, Mississippi. A new office building will break ground in Chesterfield, Missouri, later this year. A major grocery store chain is moving forward with plans to build a warehouse in Springdale, Arkansas.\nBanking and Finance\nTotal loans outstanding at a sample of small and midsized District banks increased 1.2 percent from the end of December to mid-March. Real estate lending, which now accounts for 71.5 percent of total loans, decreased 0.2 percent over the period. Commercial and industrial loans, now accounting for 16.0 percent of total loans, increased 1.5 percent over the period. Loans to individuals, now accounting for 5.0 percent of total loans, decreased 0.5 percent over the period. All other loans, which now account for 7.4 percent of total loans, increased 1.6 percent over the period. Total deposits at these banks increased 2.4 percent over the period.\nAgriculture and Natural Resources\nDistrict farmers will plant fewer acres of corn and cotton this year than in 2014. In lieu of cotton and corn, District farmers will plant more acres of soybeans and notably more sorghum. Arkansas and Mississippi farmers are significantly behind in their corn plantings as of late March due to very wet conditions. Persistent wet conditions may motivate farmers to switch additional plantings of corn to soybeans due to a later sowing window for soybeans. A rancher in western Arkansas also noted that the ground is wetter than it has been in over 25 years. District coal production for February was about 7.5 percent lower than in February 2014. The overall decline was driven by decreased production in Illinois, Indiana, and western Kentucky.\nEmployment, Wages, and Prices\nAnecdotal information suggests that employment growth is modest and wage pressures remain moderate in the District. Most new jobs have been announced in the retail and service sectors, while layoffs have been announced in the manufacturing sector. A manufacturing contact in Little Rock suggested that it has become increasingly difficult to hire and keep quality staff. Construction industry contacts in Louisville and St. Louis noted difficulties finding qualified workers. Transportation industry contacts continue to note that wages for employees with critical skills are increasing faster than wages for other positions.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Philadelphia

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"Beige Book Report: Philadelphia\nApril 15, 2015\nAggregate business activity in the Third District continued to grow at a modest pace during this current Beige Book period. Staffing firms and other general service-sector firms continued to report a moderate pace of growth; however, auto sales appear to have slowed to a modest pace of growth after adjusting for the relatively colder winter weather effects in 2014 compared with 2015. Nonauto retailers continued to report modest growth, as did the commercial real estate sectors for construction and for leasing of existing commercial properties. Manufacturers continued to report only slight growth, and brokers reported the same in regard to existing home sales. Residential builders responded with mixed reports of slower construction progress due to bad weather but also reported rising inquiries and contract signings. Reports from tourism contacts also were mixed, with late snow and cold conditions extending the ski season somewhat but limiting visitor traffic at shore destinations.\nLending volumes appeared to slow--registering only a slight pace of growth. Generally, credit quality continued to improve. As in the previous Beige Book, contacts reported slight increases in wages and home prices. Overall price levels were also up slightly, but some prices fell, as the impact of lower energy prices worked its way through the economy. Contacts continued to anticipate moderate growth of economic activity over the next six months.\nManufacturing\nOverall, Third District manufacturers continued to report a slight pace of growth during the latest Beige Book period. Reports of new orders changed little from last period, but shipments fell slightly, possibly because of weather impacts. Gains in activity appeared to be stronger among the makers of industrial machinery, electronic equipment, and paper products; activity appeared weaker among the makers of primary and fabricated metal products. Producers of wood products for the home construction sector also expressed very positive comments about current activity and expected orders; one firm noted that incoming orders included more special features for the first time since the downturn, and another cited her company's own investment in three new $450,000 trucks.\nExpectations of growth during the next six months remained positive at levels typical for an expansionary period. Some firms continued to note greater uncertainty due to anticipated weak demand from customers serving the energy production sectors; however, few have noted direct reductions yet. Firms reported slight decreases in their expectations of future employment and capital expenditures. These shifts were driven by fewer firms reporting expected hiring and by more firms reporting decreases in future spending.\nRetail\nActual growth estimates of nonauto retail sales (year over year) were reasonably strong, according to Third District contacts. However, after adjusting these data for effects of harsh weather on 2014 sales, nonauto retail sales appear to have continued growing modestly. Operators of malls, outlet malls, and convenience stores agreed that lower energy prices were also boosting sales; one contact indicated that consumers had more discretionary income from energy savings at home and at the pump. According to contacts, consumers remain focused on low prices; thus, retailers continue to compete with heavy promotions and to experience very tight margins. Contacts continued to expect modest growth throughout 2015.\nAuto dealers reported modest growth in sales year over year--lower than last period. As with general retail sales, auto sales growth was higher year over year, until adjusting for the severe winter weather last year and for one fewer sales weekend in March 2015. Pennsylvania dealers reported that March 2014 had benefited from a rebound off of low February sales due to heavy snows. This year's bleak winter weather continued into March, thereby limiting the normal rise in sales from February to March. Similarly, New Jersey dealers anticipated higher sales in March than in February, but they were far below last year's tally. Auto dealers remained optimistic for overall growth in 2015.\nFinance\nThird District financial firms have reported only slight overall increases in total loan volume since the previous Beige Book. Volumes continued to decrease seasonally for credit card lines, as consumers paid down their post-holiday debt; similarly, volumes of home equity lines fell. Strong growth was reported for commercial and industrial lending, while mortgages, commercial real estate loans, and auto loans grew little, if at all. On a year-over-year basis, loans secured by real estate were up slightly while most other loans were up modestly. Banking contacts generally expressed growing confidence in the quality of their loan portfolios and in their customers' balance sheets. Furthermore, contacts described growing confidence and stability in the consumer market. On the business side, contacts reported some increased hiring and a growing readiness for greater investment in expanding new capacity and/or new businesses. Contacts are generally optimistic for continued growth prospects in 2015.\nReal Estate and Construction\nThird District homebuilders reported that winter weather slowed some work in progress and delayed some starts, but that traffic, inquiries, and contract signings showed improvements at times during February and March. Overall, conditions remained mixed with little overall growth. Homebuilders continued to report an absence of first-time homebuyers; most sales were made to higher-income, move-up buyers. Builders are still expecting a little growth in 2015. Brokers reported that existing home sales were slightly greater in February on a year-over-year basis throughout most of the larger urbanized areas of the Third District, including the Jersey shore. The winter weather a year ago kept last year's numbers low; however, this past winter was only somewhat better for touring homes on weekends. A broker in the Greater Philadelphia area indicated that the market appears to be picking up momentum in March with pending sales up by double-digits year over year. There is still a lack of inventory at the fastest-selling price points, while high-priced homes tend to linger on the market. Overall, prices are rising slightly. Brokers remained hopeful for greater growth in 2015.\nNonresidential real estate contacts reported little change to the modest pace of construction and leasing activity. New construction continued to be dominated by projects in downtown Allentown and Philadelphia that include office, retail, and residential components. Throughout the Third District, industrial/warehouse projects, public infrastructure, and suburban office renovations remain active and in demand. Design and renovations to improve energy-efficiency are also in demand. Contacts attributed a little continued rent pressure on office space to some emerging employment growth. Demand and rent pressures are greatest in downtown and suburban Philadelphia, especially for Class A or better office space. Center City Philadelphia residential and retail markets, as well as several select suburban office markets, also continued to be active. Contacts remained optimistic for the ongoing growth of both new construction and leasing activity in 2015.\nServices\nThird District service-sector firms have continued to report moderate growth in activity since the previous Beige Book. About half of all firms continued to report increases in new orders and sales, but, this time, somewhat more firms reported decreases in new orders and sales. Several large services firms reported steady, moderate growth. For these firms, the year was off to a good start with no long weather disruptions and somewhat lower costs. A central Pennsylvania staffing contact reported that his firm was very busy and that the area unemployment rate was very low. The contact also reported that there were more open positions than people unemployed. Several service-sector firms reported little or no wage pressure. Among all service-sector contacts, nearly three-fourths reported expectations that growth trends for their firms will remain positive over the next six months; none anticipated declines.\nThird District tourist areas reported mixed conditions as the winter drew to a close. The added snow and cold extended the ski season a little, but conditions were too harsh to attract extra visitors along the shore. However, contacts up and down the shore have reported very strong early bookings for the summer season, with many weekends booked up. After a one-month anomalous increase in January, revenue results for Atlantic City casinos resumed the old patter of double-digit declines in February.\nPrices and Wages\nMore Third District contacts reported price decreases than are typical; however, the overall price level has continued to increase slightly since the previous Beige Book period. Manufacturing contacts reported slight decreases in the prices they pay and the prices received for their products since the prior period. The number of firms noting increases remained the same, while the number of firms noting decreases rose significantly. Among nonmanufacturing firms, a somewhat higher percentage of contacts reported increases of prices paid since the prior period, and a somewhat greater percentage reported decreases of prices received; the overall indexes for prices paid and for prices received remained positive. Most contacts, including those from staffing firms, continued to note little significant change in wage pressures. One contact reported that retailers generally plan to hire at the same levels as last summer with no wage increases.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Minneapolis

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"Beige Book Report: Minneapolis\nApril 15, 2015\nThe Ninth District economy grew moderately overall since the previous report. Increased activity was noted in consumer spending, commercial and residential construction and real estate, and professional services. Activity was flat in manufacturing and tourism, while activity decreased in energy and mining and in agriculture. Labor markets were mixed, as a number of layoffs were noted since the previous report. Overall wage increases were moderate, and prices generally remained level.\nConsumer Spending and Tourism\nConsumer spending increased moderately. In Minnesota, a mall reported sales up 10 percent in February compared with a year earlier, while another mall noted that sales during the first quarter were level with a year ago and that traffic was up slightly. Sales and traffic during the first quarter were ahead of last year at a mall in Montana. A retailer in Minnesota expects same-store sales to grow 2 percent during the three-month period ended in April compared with a year ago. An auto dealer in Minnesota reported that car and truck sales during the first three months of 2015 were slightly ahead of a year ago.\nTourism activity was flat. Warm weather and lack of snow brought an early end to winter tourism activity in several areas of the District. However, a ski resort in Montana reported good snow conditions with lodging on par with a year ago and skier visits slightly behind last year. A tourism official in western South Dakota noted that warmer weather has boosted visits to National Park areas and that summer bookings for hotels were up compared with a year ago.\nConstruction and Real Estate\nCommercial construction activity increased. Plans for a new 36-story commercial building in downtown Minneapolis were announced. North Dakota enacted a \"surge\" law, which adds $1.1 billion in infrastructure construction to the energy-producing region of the state. In Sioux Falls, S.D., the value of February commercial permits increased from a year ago. In Billings, Mont., commercial permits increased in value in March from a year earlier. On balance, residential construction activity in the District was up compared with a year ago. In the Minneapolis-St. Paul area, the value of March residential permits increased 39 percent compared with March 2014. March single-family residential building permits in Billings decreased in value from the previous year, but multifamily values increased. The value of February residential permits in Sioux Falls decreased from a year earlier.\nActivity in commercial real estate markets increased since the previous report. An industrial real estate market specialist said that the Sioux Falls industrial market is \"incredibly tight.\" A large health care company is securing more office space in North Dakota. An increased number of commercial real estate transactions were announced since the last report in many areas of the District. Residential real estate activity increased. In the Sioux Falls area, February home sales were up 6 percent, inventory increased 8 percent, and the median sales price increased 12 percent relative to a year earlier. Western Wisconsin home sales increased 7 percent in February from a year earlier, and the median sales price rose 6 percent. Minnesota home sales were down 1 percent in February from a year earlier, the inventory of homes for sale increased 4 percent, and the median sales price rose 13 percent.\nServices\nActivity at professional business services firms increased since the previous report. A large web development company noted that recent overall activity was up, but the type of work has changed to more mobile platforms. An architect noted increased requests for proposals.\nManufacturing\nDistrict manufacturing activity was flat overall compared with the previous report. Indexes of manufacturing activity released by Creighton University (Omaha, Neb.) covering Minnesota and South Dakota decreased in March from the previous month to levels indicating neutral growth, but the index for North Dakota increased slightly and showed positive growth. A small motorcycle producer announced that it will close a South Dakota plant. Several manufacturers of truck trailers in the District are expecting sales growth of 10 percent or more in 2015. A North Dakota firm announced a partnership to produce unmanned aerial systems and components.\nEnergy and Mining\nThe energy sector slowdown continued since the previous report. Oil and gas exploration fell further in response to lower oil prices; the number of active drilling rigs in North Dakota and Montana fell to its lowest point in five years in March. However, a company announced plans to build a new $600 million pipeline for Bakken crude. Mining activity also slowed. Three iron ore facilities in Minnesota idled or reduced production in response to lower demand from steelmakers.\nAgriculture\nDistrict agricultural conditions were weak overall going into the planting season. Crop farmers continue to feel the effects of lower prices, while conditions were better for livestock producers. Milk prices have fallen dramatically in recent months, but dairy producers were still benefitting from lower feed costs. Minnesota turkey producers were concerned about an outbreak of an extremely virulent strain of flu that has killed thousands of birds; the state is the nation's largest producer of turkeys. Prices received by farmers in February fell from a year earlier for corn, soybeans, wheat, hay, milk, chickens, and hogs; prices increased for cattle, turkeys, and eggs.\nEmployment, Wages, and Prices\nLabor markets were mixed, as a number of layoffs were noted since the previous report. In Minnesota, a retailer announced 1,700 layoffs and the aforementioned iron ore plants will lay off more than 1,100 workers as operations idle. In South Dakota, a manufacturer of agricultural equipment announced over 100 layoffs, while in North Dakota, a manufacturer of agricultural and construction equipment announced plans to lay off 80 workers. In the energy-producing areas of the District, oilfield workers were laid off with the decrease in drilling. Despite layoff announcements, several businesses continued to report difficulty filling open positions. Several businesses in western Minnesota reported difficulty finding qualified workers. A distribution center in Minnesota plans to hire 400 workers. Despite the slowdown in drilling, job openings in the energy-producing area of North Dakota increased slightly in February from January as businesses in several sectors continued to look for employees.\nOverall wage increases were moderate. Business contacts generally reported wage gains of 2 percent to 3 percent; however, there were a few reports of companies increasing their starting wage level. Strong wage increases observed in the District's energy-producing region during the past few years have slowed in recent months and in some cases decreased.\nPrices generally remained level. Minnesota gasoline prices were up slightly since the last report, but more than a dollar per gallon lower than a year ago. Iron ore prices decreased since the last report, while copper prices increased somewhat.\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 15, 2015\nEconomic activity in the Twelfth District continued to improve moderately during the reporting period of mid-February through the end of March. Overall price inflation was slight, while wage inflation was moderate. Retail sales and demand for business and consumer services increased moderately. Overall manufacturing activity improved modestly on net. The pace of output in the District's agricultural sector was unchanged. Real estate activity advanced, especially in the commercial real estate sector. Lending activity increased moderately.\nPrices and Wages\nOverall price inflation was slight during the reporting period. Declines in oil prices contributed to lower ocean freight costs and tempered increases in overall costs of construction materials in some areas. Industrial metals prices declined slightly. Competition from online shopping continued to pressure overall in-store grocery and other retail prices. However, beef prices continued to climb, and contacts expect further increases. Competitive pressures and technological advances contributed to price declines across the technology sector. Contacts in the health care industry reported that significant losses by insurers in the wake of health reform generated downward pressure on the price of health care services. Contacts expect significant rate increases for insurance on the health exchange in the fall, as insurance companies attempt to recoup previous losses.\nIn general, wages increased at a moderate pace during the reporting period. Contacts noted some seepage of wage pressures that had been limited to higher end jobs in urban areas into middle tier jobs and smaller towns. A metals manufacturer increased starting and lower-end wages recently. Some contacts expressed concern that many small businesses in rural areas will be unable to sustain proposed increases in the minimum wage in their state. Reports of increases in wages for skilled construction workers were widespread across the District. Wages for software developers and specialized workers in aerospace and healthcare continued to increase.\nManufacturing\nDistrict manufacturing activity improved modestly on net. Contacts observed robust production of commercial aircraft and electronic components. Reports pointed to persistent revenue growth in the biotechnology and pharmaceutical manufacturing sectors. Demand for aluminum and wood products weakened. Production of motor vehicles has slowed this year, perhaps due to overproduction late last year. A weak outlook for spending by the Department of Defense contributed to softness in new orders and diminished capacity utilization in the defense aerospace sector. Capacity utilization in the steel manufacturing sector declined below levels observed in 2014 and early 2015. However, demand for steel products used in construction, in particular, has been largely stable in the Twelfth District. Continued soft demand for equipment used in the mining and the energy sectors held back orders for recycled steel and metals.\nAgriculture and Resource-Related Industries\nThe pace of output in the District's agricultural sector was unchanged during the reporting period. Drought conditions continued to create challenges for many farmers, but those with adequate access to water benefited from favorable weather conditions. Reduced water availability affected plantings of annual crops, including rice, corn, and cotton. The need to purchase water or drill for water put upward pressure on the cost of production. Some farmers' outlooks deteriorated, given weakness in certain drought-related metrics, such as snow pack levels, recorded at only 8% of their historical average. Reports indicated that exports have increased somewhat since the labor disputes at West Coast ports were resolved.\nRetail and Services\nOverall retail sales activity grew moderately during the reporting period. Auto sales were healthy. Demand for mobile devices grew robustly, but sales of personal computers declined. Consumers exhibited strong demand for entertainment and gaming products. After a very good holiday shopping season, some areas saw continued momentum in the first quarter. Other areas with strong holiday sales reported unexpectedly mixed activity recently. One contact noted that tax preparers in their area are finding that a large proportion of filers projected lower than actual incomes and are facing significant repayments of excess health subsidies.\nDemand for business and consumer services grew moderately during the reporting period. Spending at restaurants increased, boosted by low gas prices. Contacts in the technology industry expect business spending on software to accelerate in 2015, especially in the security, cloud computing, and analytics segments. In areas with active residential construction, demand for engineering and architectural services was strong, with larger backlogs than at any time since before the recession.\nReal Estate and Construction\nReal estate activity advanced during the reporting period. Multi-family residential construction activity is robust in many areas, although a shortage of skilled labor in selected regions is damping the pace slightly. Several contacts reported that although the pace of single-family construction remained slower than that of multi-family, single-family construction picked up. Low inventories of single-family homes limited the pace of sales in some areas. A few contacts also cited stringent mortgage qualification requirements as an impediment to home purchases. Nevertheless, the pace of sales of single-family homes increased notably in some areas, with multiple offers and few days on the market. Many contacts reported heavy commercial construction activity. Commercial real estate vacancy rates declined, and rents increased, driven in part by strong demand from the technology and healthcare sectors.\nFinancial Institutions\nLending activity in the District increased moderately during the reporting period. Demand for commercial real estate and business loans increased. Some banks are building a sizable pipeline of pending loans and have increased interest rates a bit in order to bring demand more in line with supply. Selected areas with relatively tight labor markets and increasing wages showed strong demand for mortgages. However, with the exception of auto loans, demand for consumer loans remained low. Deposits continued to grow somewhat, despite very low interest rates. Although competition for creditworthy borrowers overall remained vigorous, some contacts reported that national and large regional banks seem to be shifting away from small and medium customers and concentrating more on large customers. Venture capital investments increased during the reporting period, but private equity financings declined.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Atlanta

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"Beige Book Report: Atlanta\nApril 15, 2015\nEconomic conditions in the Sixth District continued to improve at a steady pace from mid-February through March, according to business contacts. The majority of firms report a positive outlook for growth over the next three to six months.\nRetailers from areas affected by the severe winter weather indicated sales grew at a slower pace than during the previous period. On balance, automobile sales remained steady. Hospitality reports were mixed with some areas experiencing strong activity while other regions saw a slowdown due to the weather. Residential real estate brokers and builders reported both existing and new home sales were flat to slightly up from a year ago. Brokers indicated inventories were down, while builders cited levels that were flat to slightly up. Most contacts noted modest home price appreciation. Demand for commercial real estate continued to improve and construction increased from the year-ago level across most of the District. Manufacturers witnessed solid growth in new orders and production. Bankers reported improvements in overall lending activity. Businesses continued to add to payrolls. Firms noted muted wage pressures and low material costs.\nConsumer Spending and Tourism\nRetailers in parts of the District experienced a slight slowdown in the pace of growth from mid-February through March as severe winter weather dampened overall sales results. Apparel merchants were negatively impacted because winter clothing had already been replaced by spring merchandise. Motor vehicle sales softened due to the weather as well; however, automotive dealers noted that continued lower fuel prices prompted some buyers to purchase larger vehicles. On balance, the outlook among contacts remains positive.\nReports on tourism and business travel remained mostly positive. Florida and Louisiana reported high occupancy numbers at hotels and resorts, while Georgia, Tennessee, and Alabama indicated that activity was slower than anticipated due to the adverse weather. Contacts cited lower gas prices as a contributing factor to a rise in visitors to drive-to destinations. The outlook remains optimistic as advanced bookings in the hotel and conference segments remain strong for the second quarter.\nReal Estate and Construction\nSince the last report, District brokers continued to note improvements in existing home sales activity. Many contacts reported that home sales were flat to up slightly compared with the year earlier level, although some brokers found that sales were weaker than expected due to the weather. The majority of brokers indicated that inventory levels had fallen from the prior year's level and noted that buyer traffic was flat to slightly up compared with a year earlier. Brokers continued to cite modest home price appreciation. They also expect home sales to increase over the next three months.\nIncoming signals from District homebuilders were somewhat mixed. Most builders characterized construction as flat to down slightly from the year-ago level. New home sales were described as flat to slightly up from a year earlier. However, similar to brokers, some builders reported weak new home sales due to the weather. Most builders indicated that their inventory of unsold homes was flat to slightly up from a year ago and noted that buyer traffic was flat to slightly down compared with the year-earlier level. Despite the mixed report on activity, most builders cited some degree of home price appreciation. The outlook among builders for new home sales and construction over the next three months remained positive, with the majority indicating that they expect activity to increase modestly.\nDistrict commercial real estate brokers remarked that demand continued to improve, but cautioned that the rate of improvement varied by metropolitan area, submarket, and property type. Commercial contractors indicated that nonresidential construction had increased from the year-ago level across the District and noted that the strength in apartment construction persisted. Most contacts reported a backlog that was greater than their year earlier level. The outlook among District commercial real estate contacts remains optimistic.\nManufacturing and Transportation\nDistrict manufacturers indicated that business activity expanded from mid-February through March, continuing the trend described in the last report. Contacts witnessed increased employment levels with solid growth in new orders and production. Supplier delivery times and finished inventories rose slightly, while commodity prices remained low. Optimism regarding the outlook waned slightly since the previous report as a little less than half of purchasing agents polled expecting production levels to be high over the next three to six months.\nReports on transportation activity were mixed. Contacts at East Coast ports cited significant upticks in cargo volumes as shipments were redirected away from the West Coast due to months of labor disputes that resulted in heavy congestion and substantial backlogs. District trucking companies indicated the need to expand capacity, reflecting solid year-over-year increases in demand for freight services. Railroad cargo traffic, however, was described as flat to only slightly up compared with year earlier levels. Double-digit increases in the movement of petroleum products, aggregates, and metallic ores were noted, though volumes of phosphates and iron and steel scrap continued to decline. The majority of logistic contacts anticipate higher growth for the year.\nBanking and Finance\nCredit conditions were largely unchanged from the previous reporting period. Credit remained readily available for qualified borrowers. Loan activity was strongest in commercial real estate. Auto lending continued to be solid. Bankers noted small business lending grew in anticipation of rising rates. Commercial and industrial lending in areas linked to the energy industry slowed as a result of oil price declines. Community banks noted increased lending activity and an increase in consumer debt. Bankers were optimistic that overall loan and deposit growth would be strong this year.\nEmployment and Prices\nOn balance, businesses reported that they added to payrolls from mid-February through March. However, contacts continued to note difficulty filling a growing list of skilled and professional positions, in some cases causing firms to put projects on hold or turn down work. Increasing turnover was also described as a challenge, putting some firms in a continuous hiring mode. Layoffs were reported in areas with heavy ties to energy exploration; however, the situation has provided some relief to firms that compete with the energy industry for workers.\nOutside of high-demand and specialized skill positions, wage pressures were subdued. Though most consumers continued to have very little tolerance for nominal price increases, lower costs for oil and some raw materials have helped to boost margins for commodity and transportation-dependent firms. According to the Atlanta Fed's survey on business inflation expectations, firms' unit costs were up 1.5 percent on a year-over-year basis. Looking forward, survey respondents indicated that they expected unit costs to rise 1.7 percent over the coming 12 months, consistent with the previous report.\nNatural Resources and Agriculture\nEnergy investment slowed in the region due to declining oil and natural gas prices. Contacts cited delays and cancellations of efforts not already underway, including industrial construction and exploration and production projects. Contacts also shared that although drilling permits for new oil wells declined in the region, production levels continued to rise. Consequently, development of storage infrastructure, such as tanks, vessels, and pipelines, increased as crude oil storage inventory levels continued to build across the Gulf Coast. The petrochemical industry, on the other hand, experienced growth due to low energy prices, and utility contacts described increased industrial power activity, which returned to pre-recession levels. On balance, energy industry contacts indicated that 2015 growth expectations were reduced and employee layoffs were imminent.\nStrong global demand for poultry coupled with lower corn and soy feed prices allowed District producers to experience favorable margins. Land rents were reported to be down from last year due to low commodity prices. The most recent USDA forecast for Florida orange production was down from their previous forecast. Dry conditions were reported in much of Alabama, extreme northern Georgia, the panhandle and southern tip of Florida, as well as the southern portions of Mississippi and Louisiana.\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 15, 2015\nGrowth in the Second District's economy has slowed to a modest pace since the last report. Businesses report that selling prices remain mostly stable, while input costs rose moderately. Labor market conditions have improved slightly, on balance, in recent weeks, with scattered reports of increased wage pressures. Consumer spending has been a bit weaker, on balance, since the last report: both general merchandise retailers and auto dealers note that sales slumped in February, due largely to weather, but bounced back in March. Tourism activity has been mixed but a bit softer, on balance, while consumer confidence has slipped somewhat. Housing markets showed some signs on slowing; office markets have slackened, while the market for industrial space has continued to strengthen. Finally, banks report steady to stronger loan demand, continued narrowing in loan spreads, and lower delinquency rates across the board.\nConsumer Spending\nRetailers report that sales weakened substantially in February but rebounded in March. A major general merchandise chain indicates that same-store sales fell below 2014 levels in February but were well above a year ago in March. Similarly, a major retail contact in upstate New York indicates that sales weakened considerably in February but bounced back somewhat in March; a marked falloff in Canadian shoppers was attributed to the strong dollar. In both cases, the February weakness was attributed largely to harsh weather. Contacts report that selling prices have generally been stable, and that discounting remains widespread.\nAuto dealers in both the Rochester and Buffalo areas report that new vehicle sales weakened substantially in February, due to unseasonably harsh winter weather, but bounced back in March. Used vehicle sales were mixed, with Buffalo-area dealers reporting weak sales but Rochester-area contacts describing sales as fairly sturdy. Auto dealers note that both wholesale and retail credit conditions remain in good shape.\nConsumer confidence in the region weakened somewhat in February and was little changed in March; still, it remains near its multi-year high, set in January. Tourism activity has slowed somewhat in recent weeks. In February, hotel occupancy rates rose above 2014 levels in Niagara Falls (NY) but fell in Buffalo; occupancy rates and room rates in New York City were also down from a year earlier. Broadway theaters report that both attendance and revenues weakened in March and were down from a year earlier.\nConstruction and Real Estate\nThe District's housing markets have been a bit softer, on balance, since the last report. New York City's apartment rental market has been steady to slightly stronger in recent weeks: rents have continued to edge higher in Manhattan and Queens and are up moderately from a year earlier, while rents in Brooklyn have been flat. One Brooklyn real estate authority notes that, while rents have stabilized in more established areas, they continue to rise in the more peripheral neighborhoods. New York City's co-op and condo market was mixed in the first quarter: in Manhattan, prices declined modestly from the elevated levels of early 2014; but in Brooklyn and Queens, prices registered sturdy gains, driven by low and declining inventories. Sales activity was down from a year ago citywide but still fairly high. Once contact attributes some of the weakness at the high end of the market--especially new development in Manhattan--to the stronger dollar.\nHousing markets in areas around New York City have been generally flat. Selling prices were flat to up slightly; one New Jersey contact partly attributes the sluggish recovery in housing to a persistently high backlog of foreclosed homes. Sales activity rose modestly in Westchester and Fairfield counties but remained sluggish in northern New Jersey, reportedly hampered by weather. Harsh weather was also blamed for weakness in the Buffalo-area housing market in the first quarter.\nCommercial real estate markets across the District have been mixed, with some slackening in office markets but continued tightening in industrial markets. During the first quarter of the year, office availability rates rose in the Manhattan, Long Island, and Westchester-Fairfield markets; however, rates edged down across upstate New York and were unchanged (at a high level) in northern New Jersey. Office rents are flat to up modestly. New office construction has been robust in New York City but moribund across the rest of the District. Industrial availability rates, in contrast, have continued to trend down across most of the District, and rents have risen moderately; Long Island availability rate stabilized at a low level, with rents up 8 percent from a year ago.\nOther Business Activity\nManufacturing firms report that activity weakened a bit in March, on balance. However, business contacts in most service industries report that business picked up in March, following a sluggish February. Manufacturing and service firms continue to report stable selling prices, though manufacturers note some increased pressure on input prices in recent weeks.\nThe labor market has been mixed in recent weeks, though there continue to be reports of increased wage pressures. Both manufacturers and service-sector firms report that they are expanding their workforce, on net, and plan to do so in the months ahead. One major New York City employment agency reports that hiring activity has picked up in recent weeks and that salaries are getting more of a lift than in recent years. This contact also notes that management consulting firms are hiring more--viewed as a good harbinger--and that IT workers are increasingly being hired by more traditional (non-technology) companies. Another major employment agency contact reports that job listings remain strong but has noticed a significant slowdown in the speed with which companies are making job offers.\nFinancial Developments\nSmall to medium sized banks in the District report steady demand for residential mortgage loans but increased demand for consumer loans, commercial mortgages, and commercial and industrial loans. Bankers continue to report that credit standards are unchanged across all loan categories. Contacts also report an ongoing decrease in spreads of loan rates over cost of funds across all loan categories--particularly in residential mortgages. Respondents report an increase in the average deposit rate. Finally, bankers note a decrease in delinquency rates across all loan categories, especially for residential mortgages.\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 4, 2015\nThe Sixth District's economy continued to grow at a moderate pace from January to early February. The majority of contacts are optimistic and expect near-term growth to be sustained at, or slightly above, current rates.\nOverall, District retail reports were positive over the reporting period. Motor vehicle dealer contacts indicated lower gas prices helped spur an increase in light truck sales. The District's tourism industry remained a bright spot with reports of increased activity in the business and convention segments. Residential real estate reports on home sales were mixed; however, both brokers and builders continued to witness modest home price appreciation. Commercial real estate markets continued to see improvements in demand and nonresidential construction was ahead of year-ago levels. Manufacturers reported increases in new orders and production. Bankers indicated that loan demand was strong for most business lines. On balance, the District's labor force continued to grow. Firms continued to cite nominal wage increases for most jobs and other input costs remained subdued.\nConsumer Spending and Tourism\nAfter experiencing a moderate 2014 holiday season, District merchants appeared optimistic during the early months of 2015. Recreation-and-vacation-centric retailers experienced solid overall growth last year, and expect a similar trend for the first half of 2015. Casual dining establishments saw an uptick in volume as consumers seem to be trading up from fast food options. Many contacts cited evidence, such as a noticeable increase in purchases of light trucks that lower gasoline prices had led to increased spending on other goods and services.\nHospitality contacts reported an increase in business and convention bookings. Reports from industry contacts also indicated that the U.S. dollar exchange rate was not negatively affecting international visitors to the District. Lower gas prices were also reported as a contributing factor to a rise in visitors of drive-to destinations. Hoteliers anticipate that the next three to six months will outperform last year based on advanced bookings.\nReal Estate and Construction\nSince the last report, District brokers' reports on home sales activity improved a bit. Most contacts reported that home sales were flat to up slightly compared with the year earlier level. Brokers continued to report modest home price appreciation. The majority of brokers indicated that inventory levels either remained flat or had fallen from the prior year's level and noted that buyer traffic was flat to slightly up compared with a year ago. Brokers noted that they expect home sales activity to increase over the next three months.\nIncoming signals from District builders have dampened a bit since the last report. Builders characterized construction activity and new home sales activity as flat to down slightly from the year earlier level. Many builders indicated that their inventory of unsold homes was flat to slightly up from a year ago, and noted that buyer traffic was flat to slightly down compared with the year-ago level. However, most builders continued to report some degree of home price appreciation. The outlook among builders for new home sales and construction activity over the next three months was fairly positive, with most indicating that they expect activity to increase modestly.\nCommercial real estate brokers around the District continued to report improving demand, though they cautioned that the rate of improvement varied by metropolitan area, submarket, and property type. Commercial contractors indicated that nonresidential construction activity had increased from the year-ago level across the District and noted the strength in apartment construction has persisted. Most contacts reported a backlog that was greater than their year earlier level. The outlook among District commercial real estate contacts remained positive.\nManufacturing and Transportation\nDistrict contacts indicated that manufacturing activity rebounded during the current reporting period, following a modest slowdown in December. Increases in new orders and production were notable, and factory employment continued to increase. Supplier delivery times slowed slightly, while contacts reported a moderate rise in finished inventory levels. With over half of contacts expecting production levels to increase over the next three to six months, optimism remained consistent with the previous reporting period.\nTransportation contacts reported an expansion of activity from January to early February. Trucking companies cited steady freight volume and notable year-over-year increases in tonnage. District ports reported significant increases in bulk cargo, container traffic, and shipments of autos from year-earlier levels. Contacts in the air cargo industry reported record freight tonnage led by strong international activity. Railroads cited marked year-over-year increases in the shipment of metallic ores, petroleum products, grain and aggregates, but volume declines in phosphates and iron and steel scrap metals. However, contacts did note that west coast port congestion may be contributing to some of the District's port activity, particularly where increases were noted. Substantial, ongoing capital investments in rail infrastructure continued to be reported.\nBanking and Finance\nCredit conditions were largely unchanged from the previous reporting period. Overall, credit remained readily available and small businesses reported more access to credit. Loan demand was strong among most lines of business, particularly commercial and mortgage lending. Bankers noted increased lending to businesses such as hotels and restaurants. Loan pricing and structure remained competitive. Banking contacts indicated their lending standards remained fairly conservative.\nEmployment and Prices\nOverall, businesses indicated that they continued to add to payrolls. However, contacts continued to report difficulty filling skilled positions in the information technology, finance, construction, and manufacturing industries. In addition, a number of contacts noted that retail and other service-based entry-level positions were becoming more difficult to fill. Some firms engaged in energy exploration and production and oilfield service providers reported layoffs resulting from declines in energy prices.\nInput cost pressures remained subdued for most firms. The Atlanta Fed's poll of business contacts in January indicated that, on average, firms anticipate unit costs to rise 1.7 percent over the coming 12 months, down two-tenths of a percentage point from the December reading. The decline in fuel prices was overwhelmingly seen as an opportunity to improve margins rather than lower prices. Plans for wage increases in 2015 were little changed, with most contacts budgeting two-to-three percent increases for the year. However, figures remained higher for more competitive or difficult-to-fill positions, and several contacts indicated increasing entry-level wages.\nNatural Resources and Agriculture\nCrude oil storage continued to expand onshore and off, which contributed to high crude oil inventory levels across the Gulf Coast. Impacts of declining energy prices have been mixed. Petrochemical, industrial power, transportation, and manufacturing contacts with business dealings in the energy sector described positive outcomes, such as improved profit margins from lower fuel and feedstock costs, as well as steady project bookings through 2015. However, firms engaged in exploration and production and oilfield service providers began to report negative effects to business activity, including employee layoffs.\nDrought conditions improved in parts of the District although there were still some areas reportedly affected by dry conditions. Florida citrus crop producers continued field practices to combat citrus greening while the USDA announced additional funding to help fight the disease. The most recent 2015 domestic production forecasts for rice, soybeans, peanuts, and cotton were unchanged from a month ago while beef, pork, and broilers production projections were up from the prior month.\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 4, 2015\nBusiness contacts in the First District are fairly upbeat this round, notwithstanding selective negative impacts from unseasonably severe weather in southern New England. Most responding retailers and all contacted manufacturers report sales growth from a year earlier; software and information technology services firms also cite revenue increases, and residential real estate contacts say December was strong. By contrast, staffing firms have seen business activity fall off because of weather closures, and residential real estate markets are said to have softened in early 2015 because of the inclement weather. Commercial real estate markets remain mostly solid in the region. Labor markets are largely unchanged, as most business contacts are doing minimal hiring; nonetheless, staffing firms cite inadequate labor supply as their main challenge. Pricing is not generally noted as an issue, except for some manufacturers' concerns with the strong dollar. The outlook among contacted First District firms is largely positive across major sectors.\nRetail and Tourism\nFirst District retail respondents report that their comparable-store sales have ranged from flat to up 18 percent on a year-over-year basis; however, the most frequently cited increases were between 3.5 percent and 5.5 percent. Footwear, outerwear, activewear, and winter sporting goods are selling particularly well. The firm reporting the 18 percent increase attributes about three-quarters of the added volume to strong demand for winter-related items like rock salt and snow shovels, as the Boston area and other parts of New England experienced record snowfalls between mid-January and mid-February. Other contacts say that early 2015 sales continued the positive trajectory in place by the end of 2014, but business dropped off noticeably in late January, when the first of four (to date) significant winter storms hit. One retailer reports that over the last month, about 200 of their stores based in New England had been closed for a few days because of the severe weather.\nContacts report that inventories are being actively managed; some deliberately increased stock by taking advantage of wholesale deals that suppliers offered at the end of 2014, while others plan to do some strategic trimming of inventory over the next 6 to 12 months. Most contacts report having fairly aggressive capital spending plans for 2015; investment is targeted toward information technology plus opening new stores and/or renovating or relocating existing stores. These plans are a reflection of expected continual improvement in general economic conditions, improved consumer sentiment, and hence a better retail environment. During the last few years, one contact has continually maintained a \"sideways\" (flat) outlook for the U.S. economy, but on this round reports that in 2014:Q4 his firm saw the first consistent week-to-week improvement in sales in several years; as a result, he is upgrading his forecast to \"better.\"\nManufacturing and Related Services\nAll nine manufacturing firms contacted this cycle report higher sales versus the same period a year earlier. The main headwind they cite is the strong dollar. As a contact in the tool business explained, higher exchange rates have both \"transactional costs\" which are lost sales due to higher costs, and \"translational costs\" which result simply from the fact that income denominated in foreign currencies comes in lower when translated into dollars. Two respondents said exchange rates were a first-order problem. For the tool-maker, both translational and transactional costs are issues. For a maker of computer storage devices, the costs appear to be largely translational and are said to be more of a problem for its investors than for its U.S. production and employment.\nOf the firms that report inventory, only one cites a significant change; inventories are down, but for reasons of efficiency, not cyclical factors. Other than those expressing concern about exchange rates, only one firm reports a pricing issue. A dairy producer says that its 8 percent increase in sales is entirely due to higher prices: sales by physical volume remain exactly the same; because there was a corresponding increase in costs, profits did not change.\nAll responding firms report stable or rising employment, but only one firm, a manufacturer of health-care devices, says it is increasing employment substantially, adding about 3 percent to staff each quarter. Even firms with very strong sales growth seem hesitant to hire. For example, a maker of fitness equipment reports 16 percent higher sales in the fourth quarter of 2014 compared to a year earlier but is waiting until the second half of 2015 to see if sales growth continues before adding to headcount. Capital investment is up at all contacted firms. However, none report major revisions to investment plans.\nThe outlook is positive for all manufacturing respondents. One contact at a semiconductor-related firm says sales are expected to be down in 2015 from a strong 2014, and attributes the softness to long cycles in the semiconductor business, which do not follow the standard business cycle.\nSoftware and Information Technology Services\nNew England software and information technology services contacts generally report good business conditions in recent months, with year-over-year revenue increases ranging from 1 percent to 14 percent. Contacts add that growth was somewhat tempered by weakness in Europe and Asia, and a slight contraction in customer expenditures in the fourth quarter of 2014. Selling prices have generally remained stable, although one firm is escalating renewal prices modestly. While most firms have maintained current wages, one contact noted upward pressure on salaries. Capital and technology spending has largely remained constant in recent months. The majority of firms increased headcount through acquisitions and increased utilization of contractors. One firm reduced headcount to offset the previous quarter's expansion from mergers and acquisitions. Looking forward, contacts are either slightly less optimistic or maintain the same level of optimism as when we last spoke three months ago. While most firms expect high single-digit year-over-year revenue increases in the first few months of 2015, one firm anticipates revenues to be down year-over-year because of the effects of the appreciation of the dollar on their earnings in Europe and Asia. Some respondents continue to express concerns about the overall macroeconomy.\nStaffing Services\nFirst District staffing contacts report softened business activity in recent months, which they attribute to inclement weather throughout the region. Most firms report year-over-year revenue declines in the high single-digit to low double-digit range. Only one firm's revenues were up year-over-year at the end of January; however, the firm expects February revenues to be down substantially. In general, labor demand continues to be strong, with increases for a variety of positions in the healthcare, maintenance work, IT, legal, and sales sectors. Labor supply reportedly continues to be a challenge across all industries, with one firm noting particular difficulties in filling clerical and assembly roles. Firms' strategies to attract candidates continued to include print advertising, online recruiting, networking, and social media outreach. Reports on billing and pay rates are mixed; some firms report low single-digit increases in both rates, while others report no changes. Looking forward, contacts generally maintain a steady level of \"cautious optimism.\" Despite a sluggish start to the year, contacts hope for single-digit to low double-digit year-over-year revenue growth as the weather improves. The main factors expected to affect business in the upcoming months include health insurance costs from the Affordable Care Act, continued weather-related closures, and difficulties in recruiting candidates to meet client demand.\nCommercial Real Estate\nAcross the First District, commercial real estate markets are seen as either steady or improving. According to contacts, the harsh winter weather in the District is affecting retail activity and business productivity in the short run, but is not having significant effects on commercial real estate leasing and sales activity. One contact reports that some office landlords in downtown Hartford are posting higher asking rents for the first time in years. While tenants in greater Hartford appear increasingly to favor downtown locations, it is reportedly too soon to tell whether they will be willing to pay the higher asking rents. Sales activity for commercial properties in Connecticut remains solid while construction activity is minimal. Reports from Boston contacts remain very positive. The city's commercial properties (as well as its multifamily structures) continue to be in very high demand among foreign investors especially, who reportedly rank Boston among the top five commercial real estate markets worldwide. Office rents are seeing significant growth in top neighborhoods as vacancy rates continue to edge down thanks to business expansion and lack of new supply. Despite the tight office market in greater Boston, speculative office construction remains very limited, according to contacts, because construction costs are too high in relation to expected rents; still, build-to-suit office construction continues at a modest pace. Also in greater Boston, a lender to commercial real estate extended a few new loans for construction of small office and industrial properties. In Providence, leasing conditions are unchanged and investor demand for commercial properties remains very cautious, even for properties in prime locations. In Portland, downtown and, especially, suburban office markets are seeing positive absorption, with resulting vacancy rates in the single digits in both submarkets.\nThe outlook is mostly optimistic across the District, although Hartford and Providence contacts expect slower improvement in commercial real estate fundamentals than do contacts in Boston and Portland. Respondents note a couple of downside risks to commercial real estate investment, including recent property tax increases in Boston and, for some, costs of compliance with the Dodd-Frank Act.\nResidential Real Estate\nDecember saw a strong end to 2014, with closed sales of single family homes increasing in all six New England states compared with December 2013. Condominium sales also increased in every state except Massachusetts. The median sales price for single family homes continued to rise in every state except Connecticut (where prices decreased), while condominium prices rose in Massachusetts and Vermont but declined in Rhode Island, New Hampshire and Connecticut. Contacts in Connecticut and Rhode Island emphasized that while Realtors are feeling very positive, the housing market will not be fully \"normal\" until shadow inventory and distressed sales are reduced further. In other states, lack of inventory remains a concern. In Massachusetts, for example, December was only the second month of the past six with a year-over-year increase in home sales, while prices have increased 26 out of the last 27 months. Contacts in Massachusetts believe these patterns are driven primarily by a shortage of inventory. The level of inventory heading into January in Massachusetts is the lowest in a decade, with only 3.7 months of supply for single family homes and 2.3 months of supply in the condominium market (Realtors say the market is balanced when a 6- to 7-month supply is available).\nFirst District contacts express concern about the possible lasting impact of the unusually harsh recent weather. In Massachusetts and Connecticut, where January data are available, pending and closed sales were down. Contacts across New England report that demand, despite the weather, remains strong but that new listings and hence inventory will decline as homeowners continue to dig themselves out. As one contact in Massachusetts says \"the weather will likely only exacerbate the supply-and-demand imbalance in our market and put upward pressure on prices,\" Longer term, Realtors remain optimistic about the coming year and are hopeful that interest rates will remain low to help potential buyers.\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 4, 2015\nThe Ninth District economy grew at a moderate pace since the previous report. Increased activity was noted in consumer spending, commercial construction, commercial real estate, professional services, and manufacturing. Activity was mixed in tourism and residential real estate and down in residential construction, agriculture, and energy and mining. While labor markets continued to tighten in several areas, signs of loosening were noted in the energy-producing region. Reports of increased wage pressures were noted in some areas. Price pressures were subdued, as oil and gasoline prices decreased during January.\nConsumer Spending and Tourism\nConsumer spending increased moderately. A North Dakota mall noted that sales were up in January compared with a year ago. A bar and restaurant chain in Minnesota reported strong sales during January compared with last year. Recent light truck and car sales were relatively solid in Montana, according to a representative of an auto dealers association. However, some apparel stores had difficulty selling winter clothing due to relatively mild weather conditions during December and January. As the U.S. dollar strengthened relative to the Canadian dollar over the past few months, border crossings and related retail sales decreased. For example, bridge crossings at the International Bridge in Sault Ste. Marie, Mich., were down 12 percent in December compared with a year earlier.\nTourism conditions were mixed. A lack of snow in many areas of Minnesota slowed snowmobiling and cross-country skiing. Light snowfall and warm weather slowed winter tourism activity in parts of Montana. However, winter tourism activity was solid in the Upper Peninsula of Michigan, where the snowpack was relatively deep. Visits from out-of-state tourists to Montana are expected to increase by 2 percent in 2015.\nConstruction and Real Estate\nCommercial construction activity increased. Recent industry reports noted increased interest in building new hotels across many parts of the District. In Sioux Falls, S.D., the value of January commercial permits increased from a year ago. In Billings, Mont., commercial permits decreased in value in January from a year earlier. Residential construction activity in the District was down compared with a year ago. In the Minneapolis-St. Paul area, the value of January residential permits decreased 19 percent compared with January 2014. The value of January residential permits in Sioux Falls decreased from a year earlier. However, January residential building permits in Billings increased in value from the previous year.\nActivity in commercial real estate markets increased since the previous report. A commercial real estate broker noted recent increases in sales and leasing transactions in the Minneapolis-St. Paul area. A real estate firm expected increased absorption and sales prices of industrial buildings in the Fargo, N.D., area in 2015 compared with last year. Residential real estate market activity was mixed. Minnesota home sales were down 9 percent in January from a year earlier, the inventory of homes for sale increased 1 percent, and the median sales price rose 10 percent. In the Sioux Falls area, January home sales were up 5 percent, inventory decreased 4 percent, and the median sales price increased 8 percent relative to a year earlier.\nServices\nActivity at professional business services firms increased since the previous report. Merger and acquisition services firms noted increased consulting activity. A large oil-drilling services company noted recent reduced demand due to lower oil prices. A railroad recently announced plans to increase capital expenditures in several District states.\nManufacturing\nManufacturing activity increased since the previous report. A manufacturing index released by Creighton University (Omaha, Neb.) increased in January from the previous month in North Dakota and South Dakota, but it fell slightly in Minnesota. The index remained at levels consistent with expansion in activity in all three states. A manufacturer of capital equipment reported that demand in January was stronger than expected.\nEnergy and Mining\nThe energy and mining sectors contracted since the last report. Oil and gas exploration activity fell rapidly in response to lower prices; the number of active drilling rigs in North Dakota and Montana fell to 128 in mid-February compared with 179 at the beginning of the year. An investor contact reported less interest in funding renewable energy technologies, due to cheaper fuel. A Montana copper-silver mine will be idled in response to low metals prices. However, a clay mine in Montana applied for a permit to expand. Production at District iron ore mines is expected to be slightly higher in 2015 than last year.\nAgriculture\nOn balance, District agricultural conditions were down, with livestock and dairy producers faring better than crop farmers. According to preliminary results from the Minneapolis Fed's fourth-quarter (January) survey of agricultural credit conditions, 70 percent of respondents said farm incomes had fallen from a year earlier, while 73 percent reported decreases in capital spending; the first-quarter outlook was similar. Land values and rents fell in 2014 in Minnesota and North Dakota, according to appraisers.\nEmployment, Wages, and Prices\nWhile labor markets continued to tighten in several areas, signs of loosening were noted in the energy-producing region. Business owners in South Dakota noted difficulty finding workers to fill openings for skilled construction and manufacturing positions. In western Montana, business owners in several sectors noted difficulty finding qualified workers. A Minnesota staffing firm reported that finding workers was difficult and that competition for those workers increased recently. A representative of a Minnesota information technology firm noted relatively low worker turnover despite the strength in the sector. However, a retailer in Minnesota announced 550 job cuts, and a plant that salvages electronics parts closed, affecting almost 80 jobs.\nDecreased oil- and gas-drilling activity in western North Dakota and eastern Montana has led to reduced hours and layoffs of oilfield workers. The number of job postings in the region has also decreased, but several companies in a variety of sectors are still looking for employees. Businesses in and around the energy-producing region have noticed an increase in the number of job applicants for open positions.\nWhile wage pressures in the energy-producing region moderated, wage pressures rose in other areas, as reports of wage increases above 3 percent were noted more frequently during the past couple months. Nevertheless, wage increases generally remained moderate.\nPrice pressures were subdued, as oil and gasoline prices decreased during January. Minnesota gasoline prices in mid-February were over a dollar per gallon lower than a year ago. Copper prices decreased since the previous 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\nMarch 4, 2015\nGrowth in economic activity in the Seventh District remained moderate in January and early February, and contacts expected growth to continue at a similar pace over the next six to twelve months. Consumer spending and manufacturing production rose moderately, while business spending and construction and real estate activity increased modestly. Credit conditions improved on balance. Cost pressures were little changed, and price increases remained limited. Prices of most agricultural commodities declined.\nConsumer Spending\nGrowth in consumer spending remained moderate in January and early February. Contacts reported that lower energy prices had a positive effect on retail sales, though not as much as they were hoping. Growth was robust for the general merchandise, clothing, and specialty gift sectors, but slower for food, beverages, furniture, and appliances. The pace of new light vehicle sales held steady, while sales of used vehicles increased. Auto dealers indicated that incentives were not as generous as during the previous reporting period, leading to less floor traffic. Dealers also noted that lower gasoline prices continued to shift the sales mix from cars to light trucks and SUVs.\nBusiness Spending\nGrowth in business spending slowed to a modest pace in January and early February. Most manufacturers and retailers reported comfortable inventory levels. However, transportation disruptions at west coast ports related to the longshoremen labor contract negotiations delayed delivery of some retail items and led some manufacturers to hold higher levels of inventories as a precaution. In addition, some auto dealers reported that inventories were slightly elevated because of over-ordering in December. The pace of current capital spending slowed somewhat, though spending plans for the next six to twelve months continued to indicate steady growth. Outlays were again primarily for replacing industrial and IT equipment, though many contacts also reported spending for capacity expansion. The pace of hiring slowed, but contacts expect continued moderate employment growth in the next six to twelve months. A staffing firm reported demand was holding steady but that job placements were down because it had become increasing difficult to find workers to fill their customers' orders. Contacts again reported strong demand for skilled workers, particularly for those in professional and technical occupations and skilled manufacturing and building trades.\nConstruction and Real Estate\nConstruction and real estate activity increased modestly over the reporting period. Demand for residential construction was mostly unchanged, but with some additional growth in single-family building in urban markets. Home prices and residential rents both increased, while home sales held steady. Solid income growth and expanding credit availability for first-time homebuyers has led real estate contacts to revise up their sales forecasts for 2015. In addition, several contacts observed that markets in low-income areas are finally showing signs of improvement. Nonresidential construction grew moderately, driven primarily by demand for industrial buildings. Commercial real estate activity expanded broadly--vacancies declined, rents rose, and leasing of industrial buildings, office space, and retail space all increased.\nManufacturing\nManufacturing production continued to grow at a moderate pace in January and early February. Activity in the auto industry remained a source of strength for the District, with contacts citing the improving labor market and low gasoline prices as bolstering demand. Auto industry contacts expressed concern, however, that high capacity utilization rates are raising costs through the increased use of overtime and limited time for preventative maintenance. Demand for steel grew steadily. Weak demand abroad combined with the relative strength of the US economy continued to draw in imported steel and push down prices. Most specialty metals manufacturers reported steady gains in new orders and solid order books, though contacts supplying the oil and gas industry reported slowing demand. Contacts also noted that the strong dollar was hurting exports. Sales of heavy machinery and heavy trucks both picked up, and manufacturers of building materials expect steady growth in shipments for 2015.\nBanking and Finance\nCredit conditions improved on balance over the reporting period. Equity markets moved higher and volatility declined. In contrast, interest rate volatility ticked up. Business loan demand increased, driven by new equipment purchases and expansions of existing facilities. Credit line utilization by middle-market firms increased slightly and business banking contacts generally noted a better than expected start to the year. Consumer loan demand increased across multiple segments. Mortgage refinancings surged and new applications rose in response to lower mortgage rates. Demand for auto loans remained strong and growth in new credit card applications increased. One banking contact noted that downward pressure on auto loan rates was leading to increased competition for sub-prime borrowers.\nPrices and Costs\nOverall, cost pressures were little changed in January and early February. Energy and steel prices decreased, while cement and drywall prices rose. Retail food prices generally declined, with the exception of meat and dairy prices. The transportation delays at west coast ports pushed up shipping costs as some contacts were forced to use alternate, more expensive supply routes. More contacts said they increased prices than during the last reporting period. Of those reporting price increases, most cited increased demand or pricing power as the reason for the increase. Wage and non-wage costs changed little on balanced. Wage pressures continued to be more pronounced for skilled workers than for unskilled workers. However, a staffing firm reported some willingness from its clients to raise pay rates for unskilled workers in order to reduce turnover.\nAgriculture\nCorn, soybean, and wheat prices were lower than during the previous reporting period, although they recovered some in recent weeks. Apart from fuel costs, input costs for spring planting have remained steady. Some farmers purchased lower quality seeds than last year to reduce their planting costs. Even though higher relative input costs were likely to shift acres toward soybean production and away from corn, there were reports that farmers were reluctant to plan major changes in crop rotations. Contacts also noted plans to return some marginal ground to pasture or hay production, instead of planting corn or soybeans this spring. Hog production was strong, with no major issues from diseases, which had cut production last year. This pushed down pork prices substantially, and consumers began substituting from beef to pork. However, somewhat lower cattle prices did not translate into lower retail prices for beef. Milk prices declined amid rising stocks of dairy products and stalled exports. The slowdowns at ports along the west coast hurt exports of many agricultural products.\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 4, 2015\nOn balance, the Fifth District economy grew at a slower pace since the previous Beige Book. District manufacturing activity weakened, with shipments and new orders flattening. Retail sales growth slowed. Revenues in the non-retail service sector grew more rapidly, and tourism was at normal seasonal levels. In finance, both consumer and commercial lending increased since the previous report. Residential real estate activity expanded moderately; activity in commercial real estate markets increased at a modest pace. Agribusinesses experienced seasonal slowing. Coal production was unchanged. Production of natural gas was also unchanged, although levels were above those of a year ago. Natural gas prices declined in recent weeks. Demand for labor generally rose.\nAccording to our most recent surveys, manufacturing employment grew modestly and average wages in the sector increased more quickly since the previous Beige Book. In the service sector, hiring was little changed and average wages rose more rapidly. Service sector prices and manufacturers' prices paid and prices received climbed more slowly in recent weeks.\nManufacturing\nDistrict manufacturing growth stalled since the previous report, with shipments and new orders flattening since the start of the year. Inventories of raw materials and finished goods rose moderately, but more slowly than in the previous report. A producer of dental equipment commented that lower patient counts had resulted in reduced sales of his products per doctor. Also, a manufacturer of sealing devices said that his company was seeing a general drop in sales. A producer of packaging materials reported a slight decline in production at his plant, and an auto parts manufacturer reported slower revenue growth. In contrast, product demand had risen for a producer of heavy equipment parts, and business was good for a food processor. Manufacturers were upbeat about business prospects for the months ahead. An executive at an electrical instruments firm in Virginia said that shipments and new orders were unchanged, but that his company had recently increased capital spending. A North Carolina textile manufacturer reported plans to increase capacity this year. An executive whose firm fabricates heavy construction products used for infrastructure said shipments were up recently. He stated that the company had increased capital spending over the past year and that he was expecting solid business growth again this year. A wood products manufacturer also reported stronger sales. Manufacturers' prices paid and prices received rose at a slower pace in recent weeks, according to contacts.\nPorts\nDistrict port activity remained strong since the previous Beige Book. Port officials continued to report high volumes of container traffic, particularly for grain exports and imports of retail products. Exports of petroleum products rose sharply at one port. Auto imports softened slightly since our last report, but imports of \"roll-on/roll-off\" equipment rose. Dockworker contract issues at West Coast ports have resulted in increased inquiries and some ship diversions to East Coast ports.\nRetail\nRetail activity slowed in the weeks since our previous report. Sales of cars and light trucks were generally flat, according to dealers in Virginia, North Carolina, and South Carolina. A dealer in the eastern panhandle of West Virginia reported slightly slower sales. Grocery and convenience stores reported a decline in food sales in in the past month. According to the manager at a Virginia chain of discount stores, holiday and post-holiday sales were softer than expected, but still higher than a year ago. Several small retailers in the Richmond area also reported good year-over-year growth in revenues. Retail price inflation slowed since our last report. A wholesaler of residential building materials reported supply price increases, which he expects to be able to pass through to his customers.\nServices\nRevenues at non-retail service firms strengthened since the previous Beige Book. Executives at telecommunications, accounting, and travel firms reported faster revenue growth in recent weeks. In addition, District hospital executives reported an uptick in demand, partly from flu outbreaks. Services prices rose at a slower pace since our previous report.\nTourism was generally at normal seasonal levels in recent weeks, with most contacts indicating a typical slowdown in activity for this time of year. However, a Charleston, South Carolina contact reported strong tourist activity. A contact on the outer banks of North Carolina said the weekend of Presidents' Day and Valentine's Day brought solid hotel bookings and rentals, with tourists attracted by off-season specials and several planned events for visitors. Hotel managers are expecting a greater-than-seasonal pick-up in the months ahead. A Maryland hotelier reported an increase in group and conference bookings for the six months ahead, and a Virginia hotel manager expects summer business to be very strong. A resort manager in West Virginia reported strong growth in current bookings and in sales of passes for the remainder of this season and next winter. Hotels and resorts reported no change in rates.\nFinance\nLoan demand increased slightly since the previous Beige Book. Residential mortgage demand rose in Virginia and West Virginia, especially for refinancing. According to a Virginia banker, consumer lending increased as customers financed home improvement projects, cars, and luxury goods like boats. Commercial and industrial lending increased in Maryland, South Carolina, and Richmond, Virginia. In West Virginia, a banker reported that commercial lending rose in some sectors but was not robust overall. Two community bankers, one in North Carolina and one in Virginia, said that commercial loan demand softened in recent weeks. Deposits increased, according to bankers in North Carolina, Virginia, and West Virginia. Throughout the District, mortgage interest rates were reported to be slightly lower. Several contacts also reported relaxed credit standards. An executive in Maryland said that large banks were easing underwriting standards, and a Virginia banker noted that increased competition has led to some lowering of underwriting standards among community banks as well. A number of contacts throughout the District said credit quality was unchanged, despite an apparent easing in standards.\nReal Estate\nResidential real estate activity increased moderately in recent weeks. Realtors in Virginia and North Carolina reported increased sales, especially for higher end homes in North Carolina. Buyer traffic picked up in several locations, which a Virginia Realtor attributed to lower interest rates. In contrast, a West Virginia contact said first-time home buyers are hesitant because closing costs and fees have gone up. Average days on the market varied by location and sales prices were generally reported as flat to rising slightly. Inventories decreased in Washington, D.C., Northern Virginia, and Charlotte, North Carolina. In Northern Virginia, custom home builders were looking for building lots. A North Carolina Realtor said that land availability was an issue.\nSince our last Beige Book, activity in commercial real estate markets increased at a modest pace. Realtors in Maryland, North Carolina, South Carolina, and Virginia reported a moderate increase in retail leasing, especially for smaller spaces and grocery stores. Office space leasing was unchanged according to contacts in North Carolina and Virginia. However office leasing picked up Charleston, West Virginia, and a real estate contact in the Wilmington, North Carolina area said that class A and class B office space was being absorbed at a faster pace. He also said that the market for industrial space had improved. A South Carolina Realtor reported that the office sector slowed slightly in Charleston due to lack of available space and the industrial market is growing even though much of the inventory is functionally obsolete. Office and industrial vacancy rates declined in other areas of South Carolina, but were unchanged elsewhere. Several contacts throughout the District reported new construction projects, especially for supermarkets, groceries and grocery-anchored shopping centers, medical centers, and apartment buildings.\nAgriculture and Natural Resources\nSince our previous Beige Book, agribusiness contacts reported typical seasonal slowdowns, but business conditions were slightly stronger than at this time last year. Additionally, a farmer in Virginia said that the spring outlook was \"really good.\" Contacts in South Carolina and Virginia reported planting and harvesting of sod, shrubs, and trees, although adverse weather conditions reduced the number of days available to do so. Input prices were reported as mostly stable in recent weeks, while sod prices rose slightly. A farmer in South Carolina expressed concern over low commodity prices and difficulty navigating recent insurance legislation.\nCoal production was unchanged overall since our previous report. In central West Virginia, production decreased marginally year over year; however, production rose slightly in the northern part of the state. Coal prices declined since the prior Beige Book. Production of natural gas was unchanged, but levels were above those of a year ago. Natural gas prices continued to decline modestly in recent weeks.\nLabor Markets\nReports on labor demand were mostly positive since our previous Beige Book. Contacts across the District reported the recent hiring of engineers, salespeople, production workers, marketers, and retail workers. Demand for employees rose in construction, hospitality, manufacturing, IT, grocery, transportation, and management. An executive said that demand had recently increased for part-time workers but was basically flat for full time employees. Throughout the District, several industries reported continued difficulty finding both unskilled and skilled labor. An office staffing executive in Charleston, South Carolina remarked that a shortage of quality candidates was leading to multiple job offers and some upward wage pressure. Similarly, the shortage of truck drivers was pushing up wages, according to one report. According to our most recent surveys, manufacturing employment growth has been modest and average wages in the sector have risen more quickly since the previous Beige Book. In the service sector, hiring was little changed, although average wages rose more rapidly.\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 4, 2015\nThe Tenth District economy continued to grow slightly in January and early February, and most contacts remained optimistic about future activity. Consumer spending was flat, with a rise in auto and restaurant sales offsetting a decrease in retail and tourism activity. District manufacturing and other business activity rose as increases in transportation, professional, high-tech services, and wholesale trade activity outweighed small declines in overall manufacturing production. Real estate activity increased slightly, and both commercial and residential inventories declined further. Banking contacts reported mixed loan demand across sectors, stable loan quality, and steady deposit levels. District farm income and crop prices decreased, cropland values remained steady, and ranchland values increased compared to the previous survey period. Energy activity continued to slow and was expected to fall further. Prices continued to grow modestly, and wages grew slightly since the previous survey period. A few contacts noted a short supply of workers for truck drivers, management, skilled technicians, and IT developers.\nConsumer Spending\nConsumer spending activity was flat in January and early February, but remained higher than a year ago with solid expectations for the coming months. Retail sales declined from the previous survey but were around year-ago levels. Several retailers noted a drop in sales of luxury products, although sales of winter and lower-priced items were steady. Expectations for future sales were increasingly positive, and inventory levels were expected to remain fairly stable. Auto sales rebounded in January and early February, particularly for trucks, and dealer contacts expected moderate growth in the months ahead. Auto inventories rose from the previous survey period, with additional increases expected. Restaurant sales improved modestly and were considerably above year-ago levels, with positive growth expected in the coming months. District tourism activity remained sluggish, although activity was higher than a year ago. Contacts in Colorado, however, reported strong tourism activity compared to the previous survey period and expected further gains over the coming months.\nManufacturing and Other Business Activity\nOverall District manufacturing activity expanded at a slow pace in January and early February, while other business activity increased. Despite a slight decrease in manufacturing production since the previous survey, inventories and supplier delivery times rose and producers' expectations for future activity remained solid. Slower growth was mostly attributable to declines in some types of durable goods production, particularly electronics, machinery, and metal products, some of which was likely due to lower energy activity. In contrast, nondurable goods producers reported a slight increase in production, especially for food and plastics products. Looking across District states, the weakest factory activity was in energy-dependent Oklahoma. Manufacturers' capital spending plans were not as strong as in the previous survey, but hiring plans remained solid. Transportation firms reported stronger activity, and sales were above year-ago levels with solid expectations for future months. Professional, high-tech services, and wholesale trade contacts also noted a slight increase in sales from the previous survey, but the pace of growth was expected to slow slightly in coming months. Most firms reported solid growth in capital spending plans.\nReal Estate and Construction\nDistrict real estate activity increased slightly as moderate growth in commercial real estate activity was partially offset by modest declines in residential real estate sales. Residential sales decreased modestly since the previous survey, partially due to typical seasonal sales patterns and low inventories. Sales of low- and medium-priced homes continued to outpace sales of higher-priced homes. Home prices made strong gains, and inventories continued to decline. Expectations for sales and prices remained positive, and inventories were expected to fall further. Residential construction activity was flat in January and early February. Builders and construction supply contacts expected moderate growth in residential real estate activity in the coming months supported by higher home prices, sales, and starts. Commercial real estate activity continued to rise moderately as vacancy rates decreased and absorption increased at a faster pace. Growth in commercial real estate completions, sales, prices, and construction underway slowed slightly, but remained positive. The commercial real estate market was expected to continue to strengthen at a moderate pace in the months ahead.\nBanking\nBankers reported mixed loan demand across sectors in January and early February, while loan quality and deposit levels were stable. Respondents indicated increased demand for residential real estate loans, and demand for commercial and industrial and consumer installment loans was mostly steady. However, respondents reported a slight decrease in demand for agricultural loans. Most bankers indicated loan quality was unchanged compared to a year ago, while a slight majority of bankers expected the outlook for loan quality to improve over the next six months. Credit standards remained largely unchanged in all major loan categories. In addition, deposit levels were stable for a majority of bankers.\nAgriculture\nDistrict farm income weakened further since the last survey period, but cropland values generally held steady. Corn and soybean prices edged down in January and early February, and farm income remained well below year-ago levels even as profitability in the livestock sector remained relatively strong. After several years of herd culling, District cattle operators retained more replacement heifers compared with last year, indicating the potential for rebuilding herds in 2015. Following several years of strong gains, District non-irrigated and irrigated cropland values leveled off while ranchland values continued to rise due to strong demand for good-quality pasture. Lower farm income trimmed farm loan repayment rates and increased demand for new loans as well as loan renewals and extensions. Looking forward, District contacts expected modest declines in cropland values and further deterioration in farm loan repayment rates amid tighter profit margins for crop producers.\nEnergy\nEnergy activity in the District continued to slow and oil and gas producers attempted to reduce costs in January and early February as a result of low oil prices. The number of active oil and gas drilling rigs fell sharply through early February. Many producers reported large capital spending cuts and several announced layoffs. Future drilling activity was expected to fall, and to increasingly focus on core areas. Additionally, respondents commented that cash flows would determine future capital spending levels. Contacts expected oilfield activity to become more efficient with cost reductions, thus limiting declines in oil production. Natural gas spot prices remained stable but low despite typical seasonally cold temperatures across the nation this winter.\nWages and Prices\nCompared to the previous survey period, prices continued to increase modestly in most industries. Wages also continued to rise slightly, with some respondents noting sustained shortages of certain workers. Retail prices rose modestly as input prices continued to grow at a moderate pace. Restaurant menu prices maintained their modest growth rate. Manufacturers' raw materials prices increased at a slower rate than in the previous survey. Finished goods prices held steady, but were moderately higher than a year ago. Transportation contacts reported moderately lower input prices, but selling prices edged higher. Construction materials prices rose over the survey period and were expected to continue to increase. Wages continued to grow moderately in the retail, restaurant, and transportation sectors, but were expected to grow at a slightly faster rate moving forward. Some contacts cited labor shortages, especially for truck drivers, management, skilled technicians, and IT developers.\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 4, 2015\nThe Eleventh District economy expanded at roughly the same pace as in the prior reporting period. Manufacturing activity was mostly stable or increased, but there were a few reports of decreased activity. Retailers and auto dealers reported higher sales. Demand for business and transportation services was mixed. Home sales continued on an upward trend and apartment demand remained strong, but office leasing activity held steady or slowed. Demand for oilfield services declined sharply, while agricultural conditions and loan demand improved slightly. Upward price and wage pressures continued to moderate. Employment in most industries held steady or increased. Overall expectations for the future were generally positive, but contacts expressed uncertainty and caution in their outlooks.\nPrices\nMost responding firms said prices held steady or declined over the past six weeks. Manufacturers generally reported stable selling prices, and flat to lower input costs. Retailers and auto dealers noted steady prices, and accounting and legal firms said billing rates were unchanged since the prior report. Airlines reported lower fees and airfares, and transportation service firms noted declining fuel costs. In contrast, most staffing firms said they had raised billing rates to offset higher costs associated with the Affordable Care Act. Fabricated metals manufacturers noted continued but slower growth in prices, and one transportation service firm reported higher rates.\nThe decline in the price of West Texas Intermediate crude oil abated toward the end of the reporting period. Natural gas prices mostly remained below $3, despite harsh winter weather in the North East. Gasoline prices rose moderately in the latter part of the reporting period, while on-highway diesel prices and chemical and polymer product prices declined.\nLabor Market\nEmployment in most industries held steady or increased. Retailers and auto dealers noted stable employment levels, while manufacturers noted flat to increased employment. A few staffing, financial and transportation services firms reported increased payrolls, and construction contacts continued to report a tight labor market. Accounting firms said they hired new classes of interns for the tax season, and added that many of them will transition into fulltime jobs. Law firms noted increased competition for top law students, and staffing firms noted strong demand for IT professionals. Energy firms said they have halted hiring and started downsizing, with most expecting payrolls to decline in the first half of the year. Two firms in the retail sector said it was easier to find workers in areas near the oil fields.\nReports of rising wage pressures were less prevalent than in the prior report. Staffing services firms noted little to no wage pressure, and petrochemical manufacturers reported reduced wage pressure, particularly for downstream construction workers. High-tech manufacturers reported continued wage pressures for high skilled positions, particularly in areas with strong growth and low unemployment. Law firms said hiring of Texas lawyers by out-of-state firms establishing practices in Texas had increased wage pressure in the industry.\nManufacturing\nOverall manufacturing activity was flat to up, but there were some reports of weaker demand. Construction-related manufacturers reported mixed demand. Cement producers saw a slight dip in orders over the reporting period, which one firm attributed to lower oil prices, while brick and primary metals manufacturers noted stable demand. Fabricated metals firms saw slower growth in sales compared with the prior report, and said demand was well below year-ago levels.\nDemand for high-tech manufacturing increased since the last report, with orders for electronic devices growing at a good pace and demand for memory chips remaining very strong. Inventories were at desired levels, and the outlook for the next six months was for continued moderate to strong growth. Food producers saw a modest increase in demand, and remained largely positive in their outlooks. Transportation and machinery manufacturers noted flat to higher demand, with the exception of an oil-field machinery manufacturing firm, which reported a sharp drop in bookings since the prior report.\nGulf Coast chemical producers reported declining export demand. Refinery utilization rates, while still high, decreased slightly in January. Contacts said low oil prices have reduced production growth expectations, resulting in some midstream construction projects being delayed. Outlooks remained positive and margins healthy, although the refining side of the business was more profitable than chemicals.\nRetail Sales\nRetail sales rose during the reporting period, but the pace of growth was mixed. Demand continued to be up year over year, and a few retailers noted slight improvement in foot traffic since the last report. Two national retailers said Texas' sales performance was in line with the nation overall, while a third national retailer noted Texas was outperforming the national average. Outlooks were positive, and contacts expect modest sales growth over the next three months.\nAutomobile sales increased over the reporting period, and demand was higher than a year ago. Contacts expect steady demand growth over the first quarter, but reported more uncertainty in their outlooks for the remainder of the year.\nNonfinancial Services\nDemand for staffing services was flat to higher, and outlooks were positive, but much more cautious than the last report. Two firms said that strength in demand had shifted slightly away from Houston, which is more affected by energy activity, toward Dallas-Fort Worth, while a third noted a pullback in demand from the oil and gas sector. The accounting sector saw a seasonal increase in activity. Abstracting from seasonal movements, accounting services to auto dealerships was strong, and demand from clients in private medical practice, food services and construction industries held steady. In contrast, low oil prices stalled some projects, and tax advisory work in Houston slowed. Overall demand for legal services held steady, but contacts in Houston noted a slight decline. Litigation and bankruptcy work picked up, but transaction work for law firm offices in Houston slowed moderately. Demand for real estate-related work continued to do well, although Houston showed signs of slowing.\nChanges in cargo volumes were mixed, and outlooks of transportation service firms were mostly positive. Trucking firms said cargo volumes declined because of shipping disruptions at West Coast ports, while rail and small-parcel shipments increased in January, and were up year over year. Container traffic trended upwards, largely driven by strength in the Asian and Transatlantic markets. Airlines said passenger demand weakened, particularly to South American markets, and outlooks were slightly less optimistic.\nConstruction and Real Estate\nHousing activity remained solid, and outlooks were mostly positive. Home sales rose during the reporting period, although reports on the pace of growth were mixed. Contacts in Dallas-Fort Worth noted a strong, earlier-than-normal pickup in traffic and sales, while demand in Houston held steady. Home prices continued to edge upward. Land prices were elevated, and several contacts reported decreased builders' appetite for land. Apartment demand stayed strong, particularly for class B space. Rent growth remained solid in Dallas-Fort Worth, but slowed in Houston.\nCommercial real estate activity held steady or slowed since the previous report, and outlooks were cautiously optimistic. Overall office leasing activity remained fairly solid; however, contacts said some energy firms are seeking to sublet office space in Houston. Institutional equity for new development has nearly dried up in Houston, and a few projects have been put on hold or cancelled.\nFinancial Services\nLoan demand increased slightly over the past six weeks. Growth in consumer lending remained robust, and commercial real estate, as well as construction and industrial lending, continued to provide a healthy pipeline of work. The quality of loans previously made to oil and gas firms remained high, although contacts expressed concern about the future because of low oil prices. Deposit volumes grew over the reporting period, despite expectations for a slight seasonal decrease. Outlooks were optimistic, but more cautious compared with the previous report. Interest rates on loans remained at historically low levels, and deposit rates continued to hover just above zero.\nEnergy\nDemand for oilfield services fell sharply in the Eleventh District. Declines were concentrated in the Permian Basin and Eagle Ford regions, and contacts reported a pullback in both horizontal and traditional vertical drilling. Outlooks remain pessimistic and uncertain, with firms expecting a roughly 30 percent decline in capital expenditures this year.\nAgriculture\nMoisture conditions stabilized for a large portion of the District, but drought conditions persisted in some areas. Cotton prices are below profitable levels for most producers. Prices and export demand for sorghum is high, which may lead more farmers to favor sorghum over cotton when making planting decisions this spring. The strong dollar has slowed agricultural exports. Corn, cattle, wheat, soybeans and dairy prices declined over the reporting period.\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 4, 2015\nOn balance, the Fourth District's economy expanded at a modest pace during the past six weeks. Activity at manufacturing plants was mixed. In residential real estate markets, single-family home prices rose, while unit volumes were fairly stable; nonresidential construction markets strengthened. Retailers and auto dealers reported that post-holiday sales were slightly above year-ago levels. Shale gas activity contracted due to low oil and natural gas prices. Freight shipments remained strong, but capacity issues are limiting growth. The demand for business and consumer credit slowly moved higher.\nPayrolls were little changed on net, except in manufacturing, where demand for production and sales personnel increased. Staffing firms reported that job openings and placements in financial services, healthcare, and manufacturing had risen slightly. Upward pressure on wages is limited to experienced and technically skilled personnel across industry sectors. Overall, input and finished goods prices were steady. We heard reports about declines in steel prices, diesel fuel surcharges, and rising prices for some building materials.\nManufacturing\nFactory contacts reported mixed activity during the past six weeks. Apart from seasonal factors affecting demand, declining orders were attributed to lower oil prices, a strengthening dollar, and weakening economic conditions in Europe. Growth in the motor vehicle and construction industries boosted new orders for some contacts. Overall, year-to-date results were generally better compared to those in 2014. Looking forward, manufacturers are fairly bullish about business activity. Factors tempering growth expectations include exposure to foreign markets and the price of oil. Steel producers cited declining prices, a strong dollar, aggressive imports, and a decline in oil and gas drilling as factors contributing to shipments that were softer than expected. Autos are still seen as a strong end market and orders from construction contractors improved. Several of our steel contacts downgraded their 2015 forecasts and cut inventory. Auto production at District assembly plants continued at a robust pace. Total production in 2014 was 4.5 percent higher compared to the previous year.\nCapital spending during the past six weeks was mainly for new equipment, including IT, and plant expansion. Several manufacturers noted that they have boosted capital budgets since the beginning of the year primarily because of business acquisitions. A majority of our contacts reported lower raw material prices, especially for petroleum-based products and steel. Several contacts attributed falling prices to lower global demand for commodity metals. Finished goods prices held steady. There was a notable pickup in hiring, especially for production and sales personnel. Wage pressures are limited to engineering and computer-system employees.\nReal Estate and Construction\nSales of new and existing single-family homes for all of 2014 were slightly below levels seen in the prior year, while the average sales price was 4 percent higher. Home builders were evenly split in their assessment of market conditions since the start of the year. Softening was attributed to cold weather and a shortage of desirable lots against a backdrop of stringent mortgage standards. New-home contracts were mainly in the move-up price-point categories. The first-time buyer market remains weak. There was a large drop in the number of single-family construction starts since our last report. Nonetheless, as the spring season approaches, homebuilders are fairly optimistic in their outlook. They believe the potential for higher interest rates might serve as an impetus for potential buyers to sign a purchase contract. Most builders have not raised prices since the beginning of the year.\nNonresidential builders reported pre-construction activity generally ranging from moderate to robust, and they indicated that the level of activity has increased relative to a year ago. Customers are more confident in the sustainability of the economy, and they are now ready to move forward on projects that had been postponed. Market demand is broad based, although demand for multi-unit housing and industrial and office space is strongest. Builders are adding to their backlog on a steady basis, and their backlogs are larger than a year ago. Several contacts noted that they are becoming more selective when bidding projects, and they expect margins to widen as the year progresses. Capital spending by general contractors was mainly for replacement of heavy machinery and technology.\nMaterials prices were stable apart from increases for drywall and concrete. Builders are expecting overall increases of about 3 percent this year. Diesel fuel surcharges were reduced, but lower oil prices have not passed through to other petroleum-based products. Payrolls were flat on net due to the winter weather. As spring approaches, general contractors expect a period of fairly robust hiring, including craft workers, project engineers, and managers. Little wage pressure was reported, and it was limited to experienced craft workers.Subcontractors are pushing through rate increases at a faster pace than general contractors had anticipated; these increases are to cover rising costs, including for labor, and to widen margins.\nConsumer Spending\nRetailers were generally satisfied with post-holiday sales, and they reported that January revenues were slightly higher than those in January 2014. Product lines in highest demand included cold-weather apparel, electronics, and health and wellness. Most contacts expect second-quarter sales to be somewhat higher year-over-year, as lower gasoline prices begin having a greater impact on consumer spending. The increase in promotions that began early in the fourth quarter has been scaled back, which contributed to slightly higher margins. Vendor and shelf prices were steady, other than for declines in dairy products and apparel. Beef prices remain at historic highs. Several contacts reported reductions in planned capital spending for fiscal year 2015. Spending since the beginning of the year was concentrated in real estate and e-commerce. Hiring is limited to new store openings.\nNew motor vehicles sales during January were slightly higher than those of a year ago and in December. The share of SUV and truck sales increased by about 7 percentage points compared to last January, which some dealers attributed to significantly lower gasoline prices. Looking at 2015, dealers anticipate that the year-over-year change in unit volume will be positive, but increases will not be as strong as in 2014. New inventory is in line with sales. Used vehicle sales are up slightly over last January. Capital spending this year by dealerships is mainly for maintenance and facility upgrades. Little change in payrolls is expected during the winter months. Dealer service departments are feeling wage pressures because of a lack of qualified technicians and mechanics.\nBanking\nBankers reported that demand for business credit showed moderate growth during the past six weeks. While demand was described as broad based, it was strongest for commercial real estate, and commercial and industrial loans. Consumer credit demand moved slightly higher, primarily for home equity products. Auto lending has softened. Interest rates were steady to down slightly for business and consumer credit. Many of our contacts noted an improvement in their residential mortgage business, more so on the refinancing side, which they attributed to a decline in interest rates. Delinquency rates held steady, at very low levels, and bankers expect little change going forward. No changes were made to loan-application standards. Core deposits remain strong. Payrolls were little changed on net. Hiring was mainly for jobs in commercial lending, computer-related services, and regulatory compliance. Wage pressure was felt in each of these job categories.\nEnergy\nLittle change in District coal production was reported. Spot prices for metallurgical and steam coal declined since our last report. Activity in the Marcellus and Utica shales contracted due to low oil and natural gas prices. The number of drilling rigs in the District shrank 19 percent since mid-December. Reports indicated that oil and gas producers have made significant cuts to planned capital spending for 2015, though midstream companies involved in the build out of the oil and gas infrastructure have not yet shown an inclination to pull back investment in existing projects. One energy executive said that while oil inventories are high at this time, with a cutback in production, oil stocks should decline at a rapid pace. These events could serve as the impetus for a strengthening of oil prices sometime later in 2015. Overall pricing for materials and equipment was flat. Some layoffs in the oil and gas sector and their supplier industries were reported.\nFreight Transportation\nOn balance, little change was seen in freight volume since our last report, with many carriers operating at a high level. Volume growth was seen in construction materials, crude oil, and natural gas liquids. Any softening was attributed to seasonal factors. Our contacts expect that the economy will continue to expand this year; however, capacity constraints may limit top line growth. Little change in pricing was noted other than lower revenue from fuel surcharges. Capital spending in 2015 is projected to be strong. Some carriers reported increasing existing budgets. Monies are largely allocated for replacing aging equipment. Capacity expansion is limited by driver availability. Difficulty in attracting and retaining drivers and maintenance technicians is putting upward pressure on wages for both job categories. A majority of our contacts cited a significant rise in health insurance premiums at the start of the year.\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 4, 2015\nEconomic activity in the Eighth District has increased at a moderate pace since the previous Beige Book. Recent reports of planned activity in manufacturing and services have been positive on net. Reports from retail contacts have also been positive. Overall residential real estate market conditions have improved, while commercial and industrial real estate markets and construction have been mixed. Lending activity during the past three months has increased at a sample of District banks. Over the past three months, compared with the same period a year ago, wages have grown moderately while employment and prices charged to consumers have grown modestly.\nConsumer Spending\nRetail contacts in the District noted that sales during the first two months of 2015 have stayed the same or increased relative to a year ago. The majority of retail contacts noted that sales were in line with expectations.\nReports from auto dealers were also generally positive. Contacts noted that auto sales during the first two months of 2015 have stayed the same or increased, compared with same period last year. Approximately half of auto dealers contacted reported that, relative to a year earlier, sales shifted toward new vehicles from used vehicles; the other half of contacts were split between no change and more used car sales. Similarly, contacts also noted that more high-end cars have been sold than low-end cars, compared with a year ago.\nManufacturing and Other Business Activity\nReports of plans for manufacturing activity since the previous Beige Book have been positive on net. Producers in the apparel, automobile, aerospace, and chemical manufacturing industries announced plans to hire additional employees and expand operations in the District. In contrast, firms that manufacture electronic equipment and primary metals announced plans to lay-off workers or close facilities. Hiring reports from food manufacturers were mixed. A recent survey of manufacturers indicated that most firms increased employment during the past three months, and average wages per employee also increased for the majority of firms surveyed.\nReports of plans in the District's service sector have been positive since the previous report. Firms that provide business support, air and truck transportation, recreation, and health care and social assistance services reported new hiring and expansion plans in the District. In contrast, firms in publishing services plan to lay-off employees. Firms in educational services reported both layoffs and new hires.\nReal Estate and Construction\nHome sales increased in the Eighth District on a year-over-year basis. Compared with the same period in 2013, December 2014 monthly home sales were up 5 percent in Louisville, 11 percent in Little Rock, and 29 percent in St. Louis; home sales remained the same in Memphis. December 2014 monthly single-family housing permits increased in the majority of the District metro areas compared with the same period in 2013. Permits increased 26 percent in Louisville, 49 percent in Little Rock, 13 percent in St. Louis, and 17 percent in Memphis.\nCommercial and industrial real estate market conditions were mixed throughout most of the District. Contacts in northwest Kentucky reported that a limited supply of commercial real estate is resulting in upward pressure on prices and declining vacancy rates across most property types. Contacts in Memphis reported low industrial vacancy rates. Contacts in Little Rock reported low asking rents in the commercial market. Commercial and industrial construction activity was mixed throughout most of the District. Contacts in northwest Kentucky noted that financing and regulatory constraints are increasing the costs of new commercial construction projects. A contact in Memphis reported improvements in the lending environment for commercial construction projects. Contacts in St. Louis continued to report new large multi-family construction projects in the downtown area. Similarly, contacts in Little Rock noted an increase in multi-family construction projects.\nBanking and Finance\nA survey of District banks showed that overall lending activity during the past three months increased moderately. For commercial and industrial loans, credit standards continued to be slightly lower, creditworthiness of applicants improved, demand was stronger, and delinquencies were lower. For standard residential mortgage loans, credit standards were mostly unchanged, creditworthiness of applicants improved, demand was somewhat stronger, and delinquencies were slightly lower. For credit cards, standards were unchanged to slightly lower, creditworthiness of applicants was slightly higher, demand was unchanged, and delinquencies were lower. For auto loans and other consumer loans, creditworthiness of applicants was unchanged, demand was unchanged to slightly higher, and delinquencies were lower; credit standards decreased slightly for auto loans and remained unchanged for other consumer loans.\nAgriculture and Natural Resources\nAs of early February, close to 90 percent of the District winter wheat crop was rated in fair or better condition. Total District red meat production during 2014 was largely the same compared with 2013. Missouri exhibited strong production increases in 2014, offsetting decreases observed in other District states. District coal production for January 2015 was about 1.6 percent higher than in January 2014.\nEmployment, Wages, and Prices\nA survey of District businesses indicated that, over the past three months, wages grew moderately while employment and prices charged to consumers grew modestly compared with the same period last year. For employment levels, 56 percent of contacts reported that they have stayed the same compared with the same period last year, 35 percent reported a slight increase, and 9 percent indicated a slight decrease. For prices charged to customers, 56 percent of contacts reported that they have stayed the same compared with the same period last year, 33 percent reported an increase, and 11 percent reported a decrease. Finally, for wages, 51 percent of contacts indicated that they have stayed the same compared with the same period last year, and 46 percent indicated they were higher.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

San Francisco

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"Beige Book Report: San Francisco\nMarch 4, 2015\nEconomic activity in the Twelfth District continued to improve moderately during the reporting period of early January through mid-February. Overall price inflation remained modest, while wage inflation was moderate. Retail sales and demand for business and consumer services increased moderately. Overall manufacturing activity picked up, while agricultural conditions were mixed. Real estate activity advanced, mainly in the multifamily construction sector. Lending activity increased modestly.\nPrices and Wages\nOverall price inflation remained modest during the reporting period. Reports of stable prices were widespread across the District. Several contacts observed that businesses in general appear to be using any decreases in input prices stemming from oil price declines to increase profit margins rather than decrease final prices of their products. However, contacts did note that the fuel surcharge for courier services and for delivery of wood products had declined. The price of sheetrock increased dramatically in some areas during the reporting period. Prices of branded and specialty pharmaceuticals increased markedly. Competition from imports contributed to a dramatic decline in scrap steel prices.\nIn general, wages increased at a moderate pace during the reporting period. While several contacts reported that wages had increased at about the rate of price inflation in their area, several others noted slightly faster overall wage growth. Wage pressures continued to be relatively strong for various information technology occupations. Contacts submitted scattered reports of increasing labor costs in construction. In some areas, upward wage pressures appeared for certain health-care positions, including registered nurses and pharmacists. Some tourist areas saw intensified bidding for restaurant workers.\nRetail Trade and Services\nOverall retail sales activity grew moderately during the reporting period. Automobile sales were strong, and demand for SUVs was robust. Some contacts reported new data on holiday sales since the last reporting period. Merchants in some areas showed very strong holiday sales and would have seen even larger volumes if not for delays receiving merchandise caused by labor disputes at West Coast ports. In other regions, holiday sales were not quite as strong as expected, and, as a result, retailers in those areas still have a little excess inventory. Contacts reported that most retailers are optimistic about growth over the coming year, citing decreases in gas prices and improvements in employment conditions. However, the outlook is weaker in areas where unemployment remains relatively high.\nDemand for business and consumer services grew moderately during the reporting period. Travel and tourism to Southern California increased compared with the same period a year ago. The number of international casual tourists climbed, and spending was strong in airport duty-free shops, despite the increase in the value of the dollar. Advance hotel bookings from the business segment declined somewhat. Overall travel and tourism activity in Hawaii declined a bit from the same period last year. Contacts from various areas reported that spending at restaurants increased and that new establishments opened. Some contacts observed an increase in physician and hospital visits and surmised that the growth in the number of insured patients under the Affordable Care Act has spurred demand. However, others, citing the growth of high deductible health insurance plans, observed a decline in demand for health care services.\nManufacturing\nOverall District manufacturing activity grew moderately. Contacts reported strong energy demand from aerospace, metals, and wood products manufacturers. Biotechnology and pharmaceutical manufacturing earnings were healthy. Orders for and deliveries of commercial aircraft increased in 2014, and 2015 is expected to be a record year for sales. U.S. Department of Defense budget challenges have reduced new orders and diminished capacity utilization in the defense aerospace sector. Reduced demand for equipment used in mining and the energy sector contributed to softening orders for recycled steel and metals. However, demand for these products from the auto industry and the commercial construction sector remained robust.\nAgriculture and Resource-Related Industries\nAgricultural conditions in the District were mixed during the reporting period. Drought conditions and unseasonably warm weather in parts of the District contributed to lower yields, but the associated increases in many of the prices received by farmers resulted in slightly higher revenues. Farmers remain concerned that the drought will continue, requiring them to leave more acreage fallow. Numerous contacts reported that the labor disputes at West Coast ports reduced agricultural exports, as perishable products such as fruits wasted away in storage containers waiting for shipment. Contacts also stated that the stronger dollar limited exports. Offshore demand for logs, especially from China, slowed, while domestic demand increased slightly.\nReal Estate and Construction\nReal estate activity advanced during the reporting period. Multifamily residential real estate construction activity remained strong in many areas of the District. Some areas anticipate that single-family home construction will soon pick up, as the pace of building permit issuance has climbed notably. In other areas, the pace of new construction remained slow, and single-family housing inventories continued to drift down. One contact commented that single-family home construction in their area has been limited to only pre-sold homes. In some relatively fast-growing areas, shortages of skilled labor are contributing to the tepid pace of construction. Several contacts reported a pick-up in the pace of single-family home sales but little change in prices. Commercial rents in the San Francisco Bay Area continued to rise even in the face of significant new construction, and rents for restaurant space in the Los Angeles area crept up. In other areas, commercial rents remained stable.\nFinancial Institutions\nLending activity in the District increased modestly during the reporting period. Demand for commercial real estate loans continued to climb, and demand for agricultural loans picked up. Some contacts reported that demand for small business loans strengthened, with owners beginning to expand and purchase new equipment. Demand for consumer loans other than for autos remained somewhat weak. Some contacts observed that, even with low interest rates, consumers are more cautious about taking on additional debt than at this time last year. Several contacts stated that recent declines in mortgage interest rates contributed to a small wave of refinancing activity. Deposit growth was strong in many areas, and banks have ample liquidity. Stiff competition for high-quality borrowers exerted downward pressure on loan interest rates. Overall credit quality remained good, but some contacts reported that lenders in their area appear willing to relax credit standards to imprudent levels in order to capture customers.\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 4, 2015\nAggregate business activity in the Third District continued to grow at a modest pace during this current Beige Book period. Most of the observed differences in growth stem from year-over-year comparisons with the early 2014 months that were battered by severe winter weather. This was especially true for tourism, new home construction, and existing home sales; all three sectors benefited from a somewhat milder winter this year. In contrast, manufacturers reported only slight growth after a somewhat faster pace during the previous period. Auto dealers, staffing firms, and other general service-sector firms continued to report a moderate pace of growth, as did transportation services. Nonauto retailers continued to report modest growth, while tourism appeared to have regained a strong level of activity similar to last year as snow settled on ski resorts. Residential builders responded with mixed reports that offered some optimism for a better 2015. Overall, brokers noted some slight improvement in activity. The commercial real estate sectors continued to report modest growth for construction and for leasing of existing commercial properties.\nLending volumes continued to grow at a modest pace, and credit quality continued to improve; however, increasing numbers of contacts expressed concern about weak underwriting standards. As in the previous Beige Book, contacts reported slight increases in wages, home prices, and general price levels. Contacts continued to anticipate moderate growth of economic activity over the next six months.\nManufacturing\nThird District manufacturers reported that current activity continued to grow during the latest Beige Book period but only at a slight pace. Nearly as many firms indicated declines in activity as increases. New orders and shipments also grew more slowly; the percentage of firms reporting decreases in new orders and shipments rose further compared with the last period. Gains in activity appeared to be stronger among makers of industrial machinery, electronic equipment, and paper products; activity appeared weaker among makers of primary and fabricated metal products. Overall, most firms reported that declining energy prices were having a positive impact on their own production costs and on potential demand via consumer channels; however, some firms reported weaker demand or a weaker outlook for demand from customers serving energy production sectors.\nExpectations of growth during the next six months remained positive but slipped from historically high levels to levels that are more typical of an expansionary period. The percentage of firms anticipating positive growth dropped to less than 50 percent for the first time in more than a year. Despite that shift, firms reported little change in expectations of future employment and capital expenditures, with about one-third anticipating increases and about one-tenth anticipating decreases.\nRetail\nThird District contacts have continued to report modest growth in nonauto retail sales since the prior Beige Book period. An operator of area malls reported that sales growth finished solidly for the holiday season and that their retailers were indicating good activity through January and into February. Restaurants experienced a renewed growth of customers during the fourth quarter of 2014 and attributed part of the demand as a reaction to falling gasoline prices. \"Consumers had a great month\" during the holiday season, according to an outlet mall operator, further bolstering reports that stores moved the most goods via heavy promotions. Contacts remain cautiously optimistic for 2015; however, margins remain tight for retailers, and most shoppers remain focused on low prices.\nAuto dealers continued to report moderate growth in sales year over year. A Pennsylvania contact described sales levels throughout the state as being strong overall through mid-February despite the typically softer seasonal levels. New Jersey contacts reported strong statewide sales for January; however, weather was taking a toll on early February sales. Auto dealers expect growth to continue in 2015 as it had in 2014.\nFinance\nThird District financial firms continued to report modest increases in total loan volume since the previous Beige Book. Volumes decreased seasonally for credit card lines as consumers pay down for several weeks following their holiday spending. Strong growth was reported for other consumer credit lines, including auto loans, and for commercial real estate loans. Moderate growth was reported for commercial and industrial lending, while modest growth was reported for home mortgages. Only slight growth was reported for home equity lines of credit. Increasing numbers of contacts expressed concerns that competition has lowered lending standards, undercut margins, and is beginning to lower overall credit quality. Many indicated that they saw no signs of inflationary pressures. Banking contacts tended to be most positive about economic prospects in central Pennsylvania, the Lehigh Valley area, and the Philadelphia market. Nearly all contacts have grown more optimistic about growth prospects for 2015.\nReal Estate and Construction\nThird District homebuilders provided mixed reports. A New Jersey builder was encouraged by good levels of new contract signings in January and February on the heels of a strong end-of-year close. One central Pennsylvania builder was close to budget in January but reported a slowdown in February. Generally, builders reported that housing starts have slowed with the cold and snow. Also, builders reported that regular price increases of construction materials leaves little room within their own tight margins for addressing wage pressures from their subcontractors. Builders anticipate a better year in 2015. Brokers reported that existing home sales were greater in December and January on a year-over-year basis; sales growth was the greatest in central Pennsylvania, while sales were essentially unchanged along the Jersey shore. Contacts noted that the positive comparisons are made with a 2013 sales season pounded by winter storms. Contacts continued to report slight overall increases in home prices, except in the city of Philadelphia where sales and prices are rising faster. Brokers are generally more optimistic for a return to growth in 2015.\nConstruction and leasing continued at a modest pace, according to nonresidential real estate contacts. New construction continued to be dominated by industrial/warehouse projects, urban apartment dwellings, and public infrastructure, including sand reclamation projects along the Jersey shore. Contacts reported that continuing incremental improvements in leasing activity in downtown and suburban Philadelphia is leading to some upward push on rents, especially for Class A or better office space. Center City residential and retail markets also continued to be active, as well as several select suburban office markets. Contacts remained optimistic for the ongoing growth of both new construction and leasing activity in 2015.\nServices\nThird District service-sector firms have continued to report moderate growth in activity since the previous Beige Book. About half of all firms reported increases in new orders and sales. A transportation services analyst reported that the absolute volume of traffic was approaching levels last attained during the prior expansion, which means greater highway congestion. The record volume has occurred even as trucking capacity was freeing up due to recent investments in new trucks, new drivers, and a temporary lull from regulatory constraints. The analyst also roughly estimated that the lower diesel fuel costs generated a 1 percent savings on the cost of goods shipped. Staffing contacts throughout the Third District reported positive employment trends across a broad spectrum of economic sectors. Companies reportedly kept busy at year-end with less of the typical slump in the demand for temps. Firms reported that direct hires have picked up, that the majority of hires are due to economic growth rather than replacement, and that temp placements are stronger still when compared with last year, when winter storms closed businesses for several days at a time. Staffing firms remained very positive for growth prospects in 2015. Staffing contacts described tight margins and little change in wage pressures. Among all service-sector contacts, more than three-fourths reported expectations that growth trends for their firms will remain positive over the next six months; none anticipated declines.\nThird District tourist areas reported improving conditions as the winter has worn on. Despite early season snow, the ski season had a slow start. However, contacts report that activity is now about even with last year, which was a very good season. Contacts remain concerned about the long-term impacts of the Atlantic City casino closings on the local economy and especially on the city's fiscal health. Surprisingly, casino revenues posted a rare positive year-over-year increase in January; however, it was mostly due to very weak numbers during the severe winter weather last year.\nPrices and Wages\nOverall, Third District contacts reported little change to the steady, slight pace of price level increases that was seen in other recent Beige Book periods. Manufacturing contacts reported little change in the prices they pay and the prices received for their products since the prior period. The percentage of firms reporting increases fell nearly to the same percentage of firms reporting decreases. Among nonmanufacturing firms, a somewhat lower percentage of contacts reported increases of prices paid and prices received since the prior period, and a slightly greater percentage have reported decreases; overall price pressures have lessened. Manufacturers and construction firms continued to note wage pressures to attract skilled workers. Other contacts, including those from staffing firms, continued to note little significant change in wage pressures.\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 4, 2015\nPrepared at the Federal Reserve Bank of St. Louis and based on information collected on or before February 23, 2015. This document summarizes comments received from business and other contacts outside the Federal Reserve System and is not a commentary on the views of Federal Reserve officials.\nReports from the twelve Federal Reserve Districts indicate that economic activity continued to expand across most regions and sectors from early January through mid-February. Six Districts noted that the local economy expanded at a moderate pace since the prior reporting period. Activity rose modestly in Philadelphia and Cleveland, while it increased slightly in Kansas City. Dallas noted a similar pace of growth as in the previous period, while Richmond reported that activity slowed from the modest pace seen in the prior period. Boston noted that business contacts were fairly upbeat this period, notwithstanding the severe weather.\nConsumer spending rose in most Districts, and contacts were generally optimistic about near-term sales. Travel and tourism also increased in the reporting Districts. Manufacturing generally posted gains across the Districts, although at varying rates. The demand for nonfinancial services also grew moderately on balance. Home sales increased in most Districts, while reports on residential construction were mixed. Commercial real estate market conditions remained stable or improved across the Districts. Banking conditions generally improved, and credit quality remained largely unchanged. Agricultural conditions generally worsened, and oil and natural gas drilling declined.\nPayrolls remained stable or expanded across the Districts, and contacts noted employment gains in a broad range of sectors. Wage pressures remained moderate and were limited largely to workers in skilled occupations. Most District contacts cited only flat to slightly increasing prices.\nConsumer Spending and Tourism\nMost Districts reported that overall consumer spending increased during the reporting period. The Kansas City District, however, reported that retail sales had declined since the previous survey, but were unchanged from one year ago. The Minneapolis, Atlanta, Kansas City, and San Francisco Districts reported growth in restaurant sales. Among retailers, the outlook was generally optimistic in the Philadelphia, Cleveland, Atlanta, Kansas City, and San Francisco Districts. Both the New York and Boston Districts reported that harsh winter weather negatively affected retail business in their Districts; however, the Boston and Cleveland Districts also reported increased sales of winter-related items such as winter apparel, rock salt, and snow shovels. The Minneapolis District noted that some apparel stores had difficulty selling winter clothing due to a relatively mild winter in December and January.\nAutomobile sales rose in most Districts during the reporting period. The Richmond District reported that sales of cars and light trucks were flat. Reports from the Atlanta, Cleveland, Chicago, Kansas City, and San Francisco Districts indicated increased demand for trucks or SUVs. The New York, Cleveland, and St. Louis Districts noted higher sales of new vehicles during the reporting period. The Philadelphia, Kansas City, and Dallas Districts expressed optimistic outlooks for future automobile sales.\nTravel and tourism improved in the New York, Philadelphia, Atlanta, Kansas City, and San Francisco Districts. The Richmond District reported a typical seasonal slowdown in activity. The New York District noted that tourism has remained robust in recent weeks. The Philadelphia District noted that ski season tourism has grown at a healthy pace, similar to that of last year's good season. The Minneapolis District indicated that winter tourism was mixed.\nManufacturing and Other Business Activity\nManufacturing generally increased since the previous survey, although the rate of growth varied across the Districts and sectors. The Atlanta District noted that manufacturing rebounded during the current reporting period following a modest slowdown in December. According to contacts in the Chicago and San Francisco manufacturing rose moderately, while contacts in New York noted modest gains. Contacts in Kansas City indicated slow growth, contacts in Philadelphia reported slight increases, and contacts in Dallas noted flat to positive growth. Reports from factory contacts in Cleveland District were mixed, while contacts in Richmond noted that activity weakened. Manufacturers had generally positive outlooks going forward. Firms in Atlanta expect production levels to increase over the next three to six months, some firms in Chicago expect steady growth in shipments for 2015. Manufacturers in Boston, Cleveland, and Richmond reported positive outlooks. In contrast, New York District contacts have grown less optimistic about the near-term outlook.\nAutomobile manufacturing output rose in the Cleveland, Chicago, and St. Louis Districts. Aerospace manufacturers in San Francisco expect 2015 to be a record year, and aerospace manufacturers in St. Louis reported plans to expand. Reports from primary and fabricated metals manufacturers were mixed. Firms in Chicago reported steady gains in new orders, firms in Dallas reported slower growth in demand, and firms in Philadelphia, St. Louis, and Kansas City reported weakness. In Cleveland, shipments for steel were softer than expected. Contacts in Cleveland, Chicago, and San Francisco cited increased competition from imports as a constraining factor for steel manufacturing. Industrial equipment manufacturing was mixed in Richmond and Dallas, while the Philadelphia, Chicago, and Minneapolis Districts reported gains in activity. Kansas City and San Francisco reported slower growth in machinery production.\nElectrical equipment manufacturers in Richmond reported no change in shipments and orders from the previous report, while contacts in Kansas City noted slower growth in electronics. Contacts in Philadelphia and Dallas reported an increase in the demand for electronic devices. Healthcare device manufacturers in Richmond noted reduced sales. Chemical producers in the Dallas District noted declining export demand and decreased refinery utilization rates, while chemical manufacturers in St. Louis announced plans to hire additional employees and expand operations. Food producers in Richmond, Kansas City, and Dallas noted increases in demand.\nNonfinancial service activity increased in Philadelphia, Richmond, St. Louis, and Kansas City, and San Francisco. New York and Minneapolis noted an increase in activity at professional business firms. Demand for information technology services generally improved, with increases in activity cited in Minneapolis and Kansas City. However, firms in Boston noted that good business conditions were tempered by weakness abroad and firms in New York noted some weakening. Healthcare services utilization was mixed to slightly positive. Contacts in Boston, Cleveland, and St. Louis noted increasing demand for labor in healthcare, contacts in New York reported stable activity, and contacts in San Francisco noted mixed demand. Transportation demand generally improved. Contacts in Kansas City and New York noted increases in activity. Contacts in Atlanta and Philadelphia cited record shipping volume. Contacts in Cleveland and Richmond indicated that shipping volume has remained strong since the previous report. Contacts in Atlanta noted that disruptions at West Coast ports may be contributing to the increase in shipping volume. Drilling service firms in Minneapolis reported reduced demand due to lower oil prices, and oilfield services contacts in Dallas noted a sharp decline in demand.\nReal Estate and Construction\nResidential real estate conditions were mixed across the Districts. Home sales and prices increased in most Districts; construction activity was mixed, with some Districts reporting disruptions due to severe weather. Residential sales increased in Boston, Philadelphia, Richmond, St. Louis, Dallas, and San Francisco. Sales fell in Cleveland and Kansas City. Contacts in New York, Philadelphia, and Cleveland partially attributed lower construction to inclement weather conditions. Contacts in Boston noted low levels of inventory due, in part, to inclement weather. Reports noted that low levels of inventory and lack of desirable lots continue to slow the market: Contacts in Boston, Cleveland, Kansas City, and San Francisco cited a lack of available inventory, while contacts in Cleveland and Richmond noted a lack of available lots. Single-family building permits increased in St. Louis and San Francisco. Contacts in Cleveland, Atlanta, Kansas City, and Minneapolis reported flat to declining real estate construction.\nCommercial real estate market conditions were stable or improving in most Districts. Commercial vacancy rates declined in Boston, Chicago, St. Louis, and Kansas City. In Dallas, contacts reported that commercial real estate had steadied or slowed since the previous report. The apartment market remained strong in most Districts. Apartment rental rates rose in New York, Chicago, and San Francisco. Contacts in Cleveland noted an increased demand for multifamily housing. Contacts in Dallas noted that apartment demand remains strong. Commercial construction increased in most Districts. Contacts in New York, Richmond, Atlanta, St. Louis, and San Francisco noted stable to strong multifamily construction. Contacts in Chicago reported moderate growth in commercial real estate, driven mainly by industrial buildings. In Boston, contacts noted that speculative construction remains limited due to high construction costs.\nBanking and Finance\nReports on banking conditions were mostly positive across the Districts. Overall loan demand increased in all reporting Districts, with the exception of Kansas City, where loan demand was mixed. Reports on the pace of increase varied from slight in Richmond and Dallas to strong in Atlanta and New York. Commercial real estate loan demand was strong in Philadelphia and Cleveland. Commercial loan demand increased in New York, was particularly strong in Cleveland and Atlanta, was steady in Kansas City, and was mixed in Richmond. Residential lending was positive at all reporting banks, with bankers in Cleveland, Richmond, Chicago, and San Francisco noting an increase in refinancing activity.\nReports across the Districts indicated that credit quality has remained largely unchanged or has improved since the prior reporting period. Bankers in most Districts reported no change in their own lending standards. However, several bankers in the Richmond and St. Louis Districts reported relaxed standards. Bankers in the Philadelphia, Richmond, and San Francisco Districts noted that competition is lowering lending standards more generally.\nAgriculture and Natural Resources\nAgricultural conditions worsened since the previous report across the Districts due to weak farm income, persistent drought, and declining exports. Prices for corn and soybeans fell over the reporting period in the Chicago, Kansas City, and Dallas Districts. A majority of contacts in the Minneapolis and Kansas City Districts noted that farm incomes had fallen from year-earlier levels. Kansas City noted that farmland values had leveled off after recent gains while ranchland values continued to rise due to strong demand. Input prices for the upcoming spring planting season were reported as stable in the Richmond and Chicago Districts. Contacts in the Dallas and San Francisco Districts noted that a stronger dollar was hurting agricultural exports. Furthermore, the Chicago and San Francisco Districts noted that labor disputes at ports along the West Coast have also had a negative impact on exports. Drought conditions improved but still persisted in some areas of the Atlanta and Dallas Districts, while drought conditions in the San Francisco District hurt yields and didn't show immediate signs of improvement.\nOil and natural gas drilling declined in the Cleveland, Minneapolis, Kansas City, and Dallas Districts. In contrast, the Richmond District reported that natural gas production was unchanged. The number of drilling rigs for oil and natural gas declined sharply in the Cleveland, Minneapolis, and Kansas City Districts. Oil and gas producers in the Cleveland, Kansas City, and Dallas Districts anticipate cuts in capital expenditures during 2015. Coal production was unchanged in both the Cleveland and Richmond Districts, while it increased modestly in the St. Louis District. Both the Cleveland and Richmond Districts reported lower coal prices.\nEmployment, Wages, and Prices\nEmployment levels remained stable or continued to grow in most Districts and across a variety of sectors. Contacts in several Districts noted strong labor demand and challenges filling a variety of skilled positions. Firms in the Philadelphia District reported positive employment trends in a broad range of sectors, with the majority of hires due to economic growth rather than replacement. Businesses in the New York District continued to increase employment. Contacts in the Boston and Cleveland Districts reported little change in hiring. The Cleveland, Atlanta, Richmond, and Dallas Districts reported increased hiring in manufacturing. In contrast, contacts in the gas and oil production and related industries in the Cleveland, Atlanta, Minneapolis, Kansas City, and Dallas Districts reported downsizing or layoffs.\nWage pressures were moderate across most Districts, but some contacts reported increased wages to attract skilled workers for difficult-to-fill positions. In particular, service sector firms in the New York District noted increasingly widespread reports of wage hikes. Contacts in the Cleveland, Richmond, and Kansas City Districts noted increased wage pressure due to the difficulty in attracting and retaining truck drivers. A staffing firm in the Chicago District reported some companies were also willing to raise rates for unskilled workers to reduce turnover, and contacts in the Atlanta District noted increasing entry-level wages.\nMost Districts reported flat to slight increases in overall prices. Contacts in the Cleveland and San Francisco Districts noted lower fuel surcharges, but contacts in the Atlanta and San Francisco Districts also remarked that the decline in energy prices was seen mainly as an opportunity for businesses to improve margins. The Cleveland, Chicago, and San Francisco Districts indicated that prices of some construction materials rose during the reporting period. The Kansas City District cited modest increases in retail prices, and the Dallas District noted steady prices. Manufacturing firms in the Richmond and Kansas City Districts reported that their input costs climbed at a slower pace, whereas those in the Dallas District noted they were flat to lower. Transportation contacts in the Chicago District reported that shipping costs were pushed up due to delays at West Coast ports.\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 4, 2015\nGrowth in the Second District's economy has continued to expand at a moderate pace since the last report. Businesses report that, while selling prices remain mostly stable, cost pressures have increased, including more widespread indications of rising wages. Labor market conditions, more generally, have shown further signs of strengthening in early 2015. Consumer spending has been a bit stronger, on balance, since the last report: both general merchandise retailers and auto dealers note improved sales, despite relatively harsh winter weather. Tourism activity has remained robust in recent weeks, and consumer confidence climbed to another multi-year high. Housing markets were steady to stronger in early 2015. Office markets have been mixed but mostly steady since year end, while the market for industrial space has continued to strengthen. Commercial and multi-family residential construction have picked up somewhat, but new single-family construction has been hindered by bad weather. Finally, banks report steady to stronger loan demand, further narrowing in loan spreads, and steady to lower delinquency rates.\nConsumer Spending\nRetail sales have improved somewhat, on balance, since the last report. A major general merchandise chain indicates that sales were up strongly from a year ago and also above plan in January but slowed a bit and were on plan in the first half of February. Similarly, a major retail contact in upstate New York describes January as a solid month and February as fairly strong. In both cases, harsh winter weather was said to have hindered business somewhat. In general, retailers report that inventories are in good shape and that discounting remains prevalent.\nReports from auto dealers point to a pickup in vehicle sales. Dealers in both the Rochester and Buffalo areas report that new vehicle sales strengthened in January and remained fairly brisk in early February, despite harsh winter weather. Contacts also note continued improvement in the used car market. An early-February auto show in Buffalo was reportedly well attended, despite the weather. Auto dealers note that both wholesale and retail credit conditions remain in good shape.\nConsumer confidence in the region improved further in January, rising to a more than 7-year high in both New York State and the broader Middle Atlantic region (NY, NJ, PA). Tourism activity has remained strong in early 2015. Hotel occupancy rates have been running slightly ahead of a year earlier in the Buffalo and Albany areas. By contrast, both hotel occupancy and revenues were down from a year ago in New York City, when business had been boosted by the Super Bowl. Broadway theaters report that year-to-date attendance and revenues were up more than 15 percent from 2014 levels.\nConstruction and Real Estate\nThe District's housing markets have strengthened somewhat in early 2015. New York City's residential rental market has firmed slightly: rents in Manhattan and Brooklyn are reported to be up moderately from a year ago, while they have been steady at an elevated levels in Queens. The inventory of available rentals has risen at the high end of the market--especially in Brooklyn--reflecting new development, but remains fairly tight overall. Rents across the rest of the District are up roughly 2 percent over the past year.\nNew York City's co-op and condo market has been fairly brisk thus far in 2015, despite harsh weather: sales volume was down moderately from the unusually high levels of a year ago, but still high, while selling prices were up moderately and have roughly recovered to pre-recession peak levels. Housing markets across the rest of New York State and New Jersey have mostly been sluggish, in part due to the inclement weather, though Buffalo area Realtors note solid market conditions in January and early February, despite the weather.\nLooking at commercial real estate across the District, office markets have been generally stable, while industrial markets have continued to strengthen. Manhattan's office availability rate rose nearly a full percentage point since year end, mainly reflecting new projects coming on line, while rents continued to climb and were up 4 percent from early-2014 levels. Elsewhere across the District, however, office availability rates were little changed--at a fairly low level of 11 percent in Long Island and just under 13 percent across upstate New York, but at an elevated level of near 18 percent in northern New Jersey and Westchester-Fairfield counties. Industrial availability rates continue to edge down across the District and are at or near multi-year lows in Long Island, as well as Westchester and Fairfield counties.\nCommercial construction has remained fairly listless overall, though office construction has picked up in Manhattan and northern New Jersey while industrial construction has picked up somewhat across upstate New York. Multi-family residential construction has been fairly strong across much of the District, though single-family construction has been hindered by weather.\nOther Business Activity\nContacts in leisure, hospitality, business services, transportation, and wholesale trade report that activity has picked up in early 2015; businesses in education and health and finance report stable activity; while information industry contacts note some weakening. Manufacturing firms report that activity continued to expand at a modest pace in early 2015; while they have grown less optimistic about the near-term outlook, on balance, a growing proportion plan to increase capital spending in the months ahead. Both manufacturing and service firms report stable selling prices, though service sector firms note increasing pressure on input prices.\nThe labor market has continued to strengthen since the last report, with some reports of increased wage pressures. One major New York City employment agency maintains that the job market has tightened considerably in recent months and that it is stronger, across the board, than it has been in eight years. This contact also notes that wages have accelerated, especially for workers with any computer skills. More broadly, business contacts report that they continue to increase employment, on balance, and considerably more firms plan to add than cut jobs in the months ahead. Service-sector firms also indicate increasingly widespread wage hikes.\nFinancial Developments\nSmall- to medium-sized banks across the District report increased demand for residential mortgage loans, commercial mortgages, and commercial and industrial loans, but a slight pullback in demand for consumer loans and for refinancing. Credit standards were reported to be unchanged across all loan categories. Bankers report a decrease in spreads of loan rates over cost of funds across all loan categories--particularly in commercial mortgages, where nearly half of those surveyed note lower spreads and none report higher spreads. Respondents also reported no change in the average deposit rate. Finally, banking contacts again report lower delinquency rates on consumer loans but little change in delinquencies in other categories.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

St Louis

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"Beige Book Report: St Louis\nJanuary 14, 2015\nThe pace of economic growth in the Eighth District was slightly faster than the pace reported in the previous Beige Book. Early holiday sales reports from retail contacts have indicated an increase relative to a year ago. Reports from auto dealers have generally been positive. Recent reports of planned activity in manufacturing and services have also been positive, on net, since the previous survey. Overall, residential real estate markets have remained weak, while commercial and industrial market conditions have continued to be mixed. Lending at a sample of small and midsized banks increased from mid-September to mid-December.\nConsumer Spending\nAnecdotal reports from retail contacts indicated that consumer demand has grown since the previous reporting period. Retail contacts attributed growth to low gas prices, improving regional labor markets, and low interest rates. Additionally, initial reports indicated that holiday sales throughout the District have been higher than last year's holiday sales. Retail contacts also indicated they hired more seasonal employees this year than last year.\nAuto dealers reported that end-of-year sales remained above goals--although one contact reported that sales were more sluggish in recent months than in the third quarter. Contacts noted that inventories of luxury cars are increasing faster than sales for some dealers.\nManufacturing and Other Business Activity\nPlans for manufacturing activity remained positive in the most recent reporting period. Firms in chemicals, aviation, packaging, and light machinery plan to hire new employees and expand operations in the Eighth District. In contrast, firms that manufacture furniture and paper reported plans to lay off workers or close facilities. Hiring plans among food manufacturers were mixed.\nPlans for activity in the District's service sector have also remained positive. Firms in logistics and information technology services reported new hiring and expansion plans in the District. In contrast, firms in courier, building maintenance, and business support services plan to lay off employees. Reports from firms in healthcare services were mixed.\nReal Estate and Construction\nHome sales decreased in the Eighth District on a year-over-year basis. Compared with the same month in 2013, November 2014 monthly home sales were down 11 percent in Louisville, 1 percent in Little Rock, 9 percent in Memphis, and 2 percent in St. Louis. Residential construction declined in the majority of the District metro areas. November 2014 year-to-date single-family housing permits decreased in the majority of the District metro areas compared with the same period in 2013. Permits decreased 9 percent in Louisville, 16 percent in Little Rock, and 5 percent in St. Louis. Permits increased 2 percent in Memphis.\nCommercial and industrial real estate market conditions in the District have continued to be mixed. A contact in Louisville reported modest improvement in the office space market. A contact in Little Rock expressed concern regarding occupancy rates in the downtown office market. In contrast, a contact in Memphis noted strong leasing activity in the office market and a contact in St. Louis noted that tightening industrial market conditions are placing upward pressure on asking rents. Commercial and industrial construction has also been mixed throughout the District. A contact in Louisville reported that a large employer has finalized plans for a distribution center near Jeffersontown, Kentucky. A contact in Little Rock reported that work on Arkansas's first outlet mall in southwest Little Rock will begin in January 2015. Contacts in Memphis noted that its access to rail, water, and air transportation continues to encourage large employers to build distribution centers and retail stores in the area. A contact in St. Louis reported that a major employer recently broke ground on a new production facility.\nBanking and Finance\nTotal loans outstanding at a sample of small and midsized District banks increased 1.2 percent from mid-September to mid-December. Real estate loans, which account for 71.1 percent of total loans, increased 0.6 percent over this period. Commercial and industrial loans, which account for 16.3 percent of total loans, increased 3.0 percent over the period. Loans to individuals, which account for 5.4 percent of total loans, increased 2.9 percent over the period. All other loans, which account for 7.3 percent of total loans, increased 1.8 percent over the period. During this period, total deposits at these banks increased 2.5 percent.\nAgriculture and Natural Resources\nAs of late November, about 96 percent of the District winter wheat crop was rated in fair or better condition. On average, 81 percent of the winter wheat crop had emerged across the District. A rate slightly below the 5-year average progress rate for this time of year. The majority of the slowdown was attributed to planting delays in Illinois because of wet weather conditions in October. Year-to-date red meat production in the District was 8.7 percent lower in November 2014 than in the same month last year. This decline was driven primarily by lower production in Illinois, Indiana, and Missouri, which collectively produce around 89 percent of the District's red meat output. Year-to-date coal production in the District was 2.8 percent higher in November 2014 than in the same month last year; coal production for November 2014 was about 3.2 percent higher than in November 2013.\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 14, 2015\nEconomic activity in the Twelfth District continued to improve moderately during the reporting period of mid-November through late December 2014. Overall price and wage inflation remained modest. Retail sales and demand for business and consumer services increased moderately. Overall manufacturing activity picked up, while agricultural conditions were mixed. Real estate activity advanced, mainly in the commercial construction sector. Lending activity was mixed.\nPrices and Wages\nOverall price inflation remained modest during the reporting period. In general, input costs were fairly stable. However, increases in the cost of various construction materials were widespread. Shortages of truck drivers contributed to increases in shipping costs in some areas, even amid fuel price declines. Supply constraints boosted wholesale prices of produce and meat. Effects on retail prices tended to be minimal, but selected areas saw significant jumps. Wholesale prices of agricultural commodities, such as grains, were stable or declined. Oil price declines contributed to a drop in prices in the energy-intensive aluminum production sector. Vigorous online competition exerted downward price pressures in selected retail clothing segments.\nIn general, wages continued to increase at a modest pace during the reporting period. Several contacts reported that wages were flat or had increased at about the rate of price inflation in their area. Labor shortages boosted wages of truck drivers, aerospace engineers, and construction machinists and framers. Regarding total compensation, some contacts noted that increases in employee medical insurance premiums tended to offset any increases in wages and salaries.\nRetail Trade and Services\nOverall retail sales activity grew moderately during the reporting period. Holiday spending tended to be higher than in recent years and notably so in some areas. Sales met most expectations, with few reports of excess inventories. Higher-priced items, electronics, men's and women's clothing, cosmetics, and accessories sold well. Online sales growth exceeded in-store growth. Auto sales were robust in some areas, but came in somewhat below expectations in other regions. Contacts attributed stronger overall holiday sales to continued improvement in employment conditions and decreases in gas prices. Many contacts are optimistic that these developments will continue to spur retail spending in 2015.\nDemand for business and consumer services grew moderately during the reporting period. Demand for cloud computing services continued to increase. Sales in the limited service segment of the restaurant sector slowed a bit in November but ticked back up as the holiday season progressed. Holiday spending in this segment was higher than in 2013, and contacts expect that lower gas prices will continue to boost customer traffic in the new year. Travel and tourism to Southern California grew substantially in 2014, and contacts expect this trend to continue into 2015. In particular, travel from China grew rapidly in 2014, and new extended visa rules for Chinese visitors should encourage even more tourism. Improved snow conditions and declines in gas prices contributed to a year-over-year increase in skier visits to the eastern Sierra Nevadas during the reporting period. Spending per visitor at ski destinations also increased.\nManufacturing\nOverall District manufacturing activity grew moderately during the reporting period. Contacts reported that energy demand from manufacturers was solid. Biotechnology and pharmaceutical manufacturing earnings were healthy. Semiconductor producers reported year-to-date worldwide sales increased 10 percent from the same period a year earlier, while U.S. sales were up 12 percent. Commercial aircraft production was strong. Order backlogs remained sizable, but contacts were somewhat concerned that the decline in oil prices may cause airlines to start deferring purchases of more fuel-efficient planes. Sequestration continued to erode revenues and capacity utilization in the defense aerospace sector, as the rate of new program starts declined. Increases in the pace of commercial construction boosted domestic demand for recycled steel and metals. However, the stronger dollar and weaker foreign demand reduced exports of these materials.\nAgriculture and Resource-Related Industries\nAgricultural conditions in the District were mixed during the reporting period. Declines in petroleum prices contributed to reductions in the cost of gas and fertilizer. However, some farmers also faced lower prices for their commodities. In some areas, restaurants purchased fewer vegetables. Dairy farm profits increased significantly over the past year, but milk futures prices declined recently. Uncertainty regarding future water availability in California slowed new plantings of permanent crops. Declines in demand from Japan and China contributed to a reduction in exports of logs. However, modest increases in the pace of new home construction in some areas slightly elevated domestic demand for logs.\nReal Estate and Construction\nReal estate activity advanced during the reporting period. The pace of new single-family home construction increased modestly in some areas of the District, with relatively more activity in urban areas than in rural areas. However, some contacts cited increasing costs of materials and labor and a shortage of available lots in some areas in their projections that the pace of new construction will fall back in 2015. Indeed, these contacts reported that the pace of construction permit issuance has declined. A few contacts indicated that home sales picked up a bit in December, but some contacts reported that insufficient inventory is damping the pace of sales. Multifamily residential real estate construction activity was strong in many areas of the District during the reporting period. Retail, office, industrial, or infrastructure projects also were widespread. Most contacts viewed the pace of construction as healthy. However, one contact reported that some investors are concerned that, given planned construction, there soon will be an excess supply of multifamily units in their area.\nFinancial Institutions\nLending activity in the District was mixed during the reporting period. Some contacts reported a significant increase in loan demand, mostly in the construction segment. Other contacts reported that overall loan demand remained somewhat weak. In some areas, businesses with sufficient cash turned towards internal financing. Deposit growth was strong in many areas, and banks have ample liquidity. Stiff competition for high-quality borrowers exerted downward pressure on loan interest rates, and declines in net interest margins were widespread. Some contacts reported that compressed margins contributed to increased acquisitions as smaller banks combined in order to reduce operating costs.\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 14, 2015\nThe Fifth District economy expanded modestly since our previous report. Manufacturing activity improved with somewhat higher shipments and new orders. Retail sales grew moderately, while non-retail services revenues were little changed. Tourism was at or above normal seasonal levels. In the finance sector, loan demand rose slightly. Real estate activity increased at a mild pace. District agribusiness contacts reported a seasonal slowing, although business conditions are better than last year at this time. Coal production remained at low levels. Natural gas production increased moderately in recent weeks and prices decreased slightly. Labor demand rose since our previous report, led by growth in the Carolinas. According to our most recent surveys, manufacturing employment grew at a slightly faster pace while average wage growth slowed somewhat. In the service sector, the rate of hiring moderated from the strong pace of a month earlier and wages generally rose modestly. Price increases in raw materials and finished goods slowed in recent weeks. Retail prices also grew at a slower pace. In contrast, prices in the non-retail service sector rose slightly faster.\nManufacturing\nManufacturing activity advanced, but responses were more uneven than in the previous report. Shipments and new orders grew modestly, and expectations for the months ahead remained optimistic. Inventories of finished goods rose at a faster pace, and growth in inventories of raw materials slowed. A source in West Virginia reported that some smaller manufacturers that supply materials to the natural gas industry were seeing strong growth. A plastic resin and synthetic fiber manufacturer in South Carolina stated that his company was experiencing solid growth in sales across the company's various lines including aerospace, utilities, industrial materials, medical equipment, and telecommunications. On the other hand, a flooring manufacturer in West Virginia reported that production slowed in the fourth quarter and sales were below a year ago. Manufacturers of primary metals, transportation equipment, electrical equipment, and machinery reported a slight slowdown in business since the previous report, but they expected better conditions in the months ahead. Prices of raw materials and finished goods rose at a slightly slower pace in recent weeks.\nPorts\nOfficials at the District's major ports reported strong growth in the volume of container traffic since the previous Beige Book. The volume of imported loaded containers exceeded the exported volume. According to one port official, imports of appliances, apparel, and footwear increased more quickly. Auto imports remained solid at another port, and imports of auto parts remained strong at all ports. Containerized grains and soybeans, as well as dry animal proteins and dried distiller grains (from production of ethanol), continued to lead exports. Exports of auto parts and plastic resins grew more rapidly in recent weeks. Previously reported railroad issues have eased somewhat. Port officials expressed concern that the strong dollar was affecting demand for U.S. exports.\nRetail\nRetail sales grew moderately since our previous report. The manager at a Virginia discount chain store said that holiday sales of electronics were strong, but that people were \"still very conservative\" in purchasing other goods. Another discounter commented that holiday business was slightly slower than typical. The manager at a store offering a lay-away plan reported that the program did well this year but that an unusually large amount of goods were returned to stock because customers were unable to complete sales. In West Virginia, a sporting goods store manager commented that online shopping had eroded his in-store sales. A central Virginia retail representative reported that advertising encouraging consumers to buy from local small retailers had boosted November sales revenues, but that many had a decline in sales in December. A wholesale foods executive commented that lower fuel prices reduced costs, helping to offset the effect of rising protein prices. Dealers stated that sales of autos and light trucks remained strong since the last report. Retail prices grew at a slower pace in recent weeks.\nServices\nServices firms' revenues were little changed since the previous Beige Book. Professional, scientific, and technical firms reported that demand was unchanged from previously reported levels; hospitals also reported flat demand. Trucking executives reported a normal seasonal surge in demand and continuing difficulty finding drivers. Prices in the service sector rose slightly faster.\nTourism was at or above normal seasonal levels in the weeks since our prior report. A Baltimore hotel manager said that advance bookings were at expected levels, while an executive at a resort in the North Carolina mountains reported that the entire fourth quarter was very strong and advance bookings for 2015 were ahead of last year's pace. In Virginia and South Carolina, bookings were up, and a South Carolina hotelier commented that people were spending more frequently on holiday parties. A contact on the outer banks of North Carolina stated that advance bookings were at typical levels, and current tourist activity was \"humming along.\" Rental rates and hotel rates were generally unchanged.\nFinance\nLoan demand rose slightly since our most recent report. Residential mortgage demand was mostly unchanged in the District, although there was some increased demand in Virginia and North Carolina. A lender in Virginia said that the favorable rate environment had raised residential mortgage demand and generated some growth in refinance lending. Commercial and industrial lending was higher in the Carolinas, Virginia, and West Virginia. Lenders in North Carolina and Virginia said that pipelines are growing and that most activity is new and not taking away from other banks. Commercial lenders in South Carolina and Virginia noted an uptick in construction lending for multi-family projects. Demand for credit and capital investments also rose in South Carolina, while mergers and acquisitions picked up in West Virginia. In contrast, a lender in Maryland said that banks had a lot of money to lend but not enough demand. Competition remained strong among lenders, pulling rates slightly lower and tightening margins for banks. There were some reports of lower credit standards. Credit quality improved slightly according to contacts in Virginia and was unchanged elsewhere in the District.\nReal Estate\nDistrict housing market activity continued to increase at a modest pace since the previous report. However, Realtors in some locations reported slower buyer traffic and a slight decrease in housing inventories. Average sale prices and average days on the market varied. A Maryland contact reported gradual improvement in home sales state-wide, and higher average home prices. A broker in Richmond stated that cash buyers remained very active; he also reported some recent higher-end home sales aided by lower interest rates. Single-family housing construction increased slightly in the Carolinas and Virginia since the previous report. A South Carolina residential builder stated that the high-end market is bouncing back, and that new home prices increased slightly. Multifamily construction and leasing remained active throughout the District.\nActivity in commercial real estate markets increased modestly since the previous report. District Realtors reported slight increases in the amount of retail leasing activity, but slower leasing activity in the office sector. Growth in rental rates varied by region and submarket. Commercial sales increased and prices rose slightly. Sales of retail space improved in Richmond, Virginia Beach, and Washington. A broker in Virginia Beach commented that the retail sector continued to firm up, with retail rental rate growth and strengthening retail construction. A Charleston, West Virginia contact stated that office vacancy rates remained high and market activity was unchanged since the previous report. On the other hand, a Columbia, South Carolina broker said that the office sector has been \"unreal\" and noted an increase in rental rates. A Virginia condominium developer reported an increase in new construction. Additionally, a Realtor in Charlotte said that previously announced office construction projects \"are coming out of the ground\" and there is a lot of business relocation activity.\nAgriculture and Natural Resources\nDistrict agribusiness contacts reported seasonal slowing since our previous Beige Book, although business conditions are better than last year at this time. Several farmers stated that planting and harvesting were finished for the year, although harvesting completion dates were later than usual. Farmers in South Carolina and Virginia reported no change in input prices in the past six weeks and said that output prices were generally unchanged.\nCoal production remained at the same low level overall as in our previous report. A contact stated that West Virginia coal production levels are down slightly year-over-year, except in the northern part of the state, where production increased modestly in the last six weeks. Coal prices are unchanged since our last report. Natural gas production increased moderately in recent weeks, and prices decreased slightly.\nLabor Markets\nLabor demand rose since our previous report, led by growth in the Carolinas. Reports from Asheville and Raleigh, North Carolina were particularly strong, with new hiring focused in software, professional and business services, manufacturing, and hospitality. Modest increases in labor demand were reported in Maryland and West Virginia, mainly for cybersecurity experts in Maryland and for workers in manufacturing and natural gas in West Virginia. Demand for labor in Virginia was little changed outside of seasonal increases. Contacts throughout the District continued to cite difficulties finding skilled workers in manufacturing, health care, IT, truck driving, and hospitality (especially in the culinary field). On balance, wage pressures were minimal, with a few industry-specific exceptions. According to our most recent surveys, manufacturing employment grew at a slightly faster pace while average wage growth slowed somewhat. In the service sector, the rate of hiring moderated from the strong pace of a month earlier. Average wages in the service sector generally rose modestly.\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 14, 2015\nAggregate business activity in the Third District continued to grow at a modest pace during this current Beige Book period, with very few changes in the growth rates of specific sectors. Manufacturers reported modest growth after a somewhat faster pace during the previous period. Auto dealers, staffing firms, and other general service-sector firms continued to report a moderate pace of growth. Nonauto retailers continued to report modest growth, while tourism activity appears to have slowed, with mixed reports coming from contacts at different destinations. Residential builders continued to report a slight decline in contract sales of new homes. Overall, brokers noted little change in existing home sales (sales of existing homes had risen slightly during the prior period). The commercial real estate sectors continued to report modest growth for construction and for leasing of existing commercial properties.\nLending volumes continued to grow at a modest pace, and credit quality continued to improve; however, more contacts expressed concern about loosening underwriting standards. As in the previous Beige Book, contacts reported slight increases in wages, home prices, and general price levels. Contacts continued to anticipate moderate growth of economic activity over the next six months.\nManufacturing\nThird District manufacturers reported that current activity resumed growing at a modest pace after rising more briskly during the previous Beige Book period. Reports of new orders and shipments also suggested continued growth, but with less vigor. About twice as many firms reported decreases in new orders and shipments compared with last period. Gains in activity appeared to be stronger among makers of primary metals, chemicals, and paper products; activity appeared weaker among makers of lumber and wood, rubber, and plastic products. Contacts continued to report that stronger demand emanated from the automotive and commercial aviation sectors.\nExpectations of positive growth during the next six months remained at historically elevated levels and were broad-based. Nearly two-thirds of the Third District manufacturing contacts reported positive expectations for growth. Overall, about one-third of the firms' contacts also continued to report that they expect to increase employment levels and capital expenditures. Only 10 percent or fewer of manufacturing contacts expected a decrease in employment, capital expenditures, or general activity.\nRetail\nThird District contacts have continued to report modest growth in nonauto retail sales since the prior Beige Book period. An operator of area malls reported that sales were better in 2014 than they were in 2013, but they were not spectacular. Higher-end merchandise continued to sell strongly, as it has for much of the recovery. Although contacts anticipate that retail sales will improve in 2015, one contact cautioned that more retail bankruptcies may occur in early 2015 due to shifting trends in tastes.\nAuto dealers continued to report moderate growth in sales year over year. A Pennsylvania contact described sales levels throughout the state as strong overall through two-thirds of December despite the typical seasonal slowdown. Statewide sales in New Jersey were steady between October and November; however, the year-over-year change was flat in October and up 8 percent in November. Auto dealers remain bullish for 2015, and low oil prices are shifting purchases from cars to trucks.\nFinance\nThird District financial firms have continued to report modest increases in total loan volume since the previous Beige Book. Volumes increased rapidly for credit card lines in a typical seasonal shift. Moderate growth was reported for commercial and industrial lending, while modest growth was reported in several loan segments, including commercial real estate and some consumer credit lines, such as auto loans. Only slight growth was reported for mortgages and home equity lines of credit. Most contacts reported continued improvements in their customers' credit quality and in their own loan portfolios. However, most contacts also warned that underwriting standards have loosened. A mortgage servicing contact expressed concern about loan performance in 2015 and 2016 even as the rate of mortgage delinquencies appear to be bottoming out in most states. New Jersey and Pennsylvania remain exceptions with persistently high rates of severely distressed mortgages. Contacts remained optimistic about growth prospects for the nation's economy and are especially bullish about the potential impact of low-cost natural gas on Pennsylvania's industrial prospects.\nReal Estate and Construction\nOverall, Third District homebuilders continued to report weak traffic and declining numbers of contract signings. One builder reported more potential buyers and was more optimistic for December than he was in the prior two months. Builders reported ongoing price pressures from contractors for their labor costs and continued difficulty attracting first-time homebuyers out of the rental market. Builders expect that 2015 will be a better year than 2014, but they expressed a range of opinions on whether household formations will return to the prerecession rate or settle into a new, lower normal trend. Brokers reported that existing home sales finished lower in November on a year-over-year basis; however, a broker compiling data on a 10-county Philadelphia region reported that pending sales were up in double digits through mid-December. Contacts continued to report slight overall increases in home prices. Brokers are generally more optimistic for a return to growth in 2015.\nConstruction and leasing continued at a modest pace, according to nonresidential real estate contacts. Demand continued for new industrial/warehouse projects and for projects in Center City Philadelphia and some outlying suburbs. Contacts from architecture and engineering firms reported a significant increase in bids emerging for new projects, while competition from other firms has begun to abate. The falling competition was attributed to increased demand that has begun to stretch the capacity of some firms. Contacts continued to report incremental improvements in leasing activity in downtown and suburban Philadelphia, especially for office, residential, and retail spaces in Center City and select suburban office markets. The office space demand primarily represents a shift in the desired type of office space, rather than growth of office employment. Still, contacts are optimistic for continued growth of both new construction and leasing activity in 2015.\nServices\nThird District service-sector firms have continued to report moderate growth in activity since the previous Beige Book. Nearly half of all firms reported increases in new orders and sales. Two large national firms reported ongoing growth that was meeting expectations for the fourth quarter despite some headwinds from shifting consumer trends. Staffing contacts in eastern and central Pennsylvania continued to report moderate increases in hiring for both temporary and permanent positions. Staffing requests continued to flow in on the Monday before Christmas. Christmas week is typically slower, as staffing orders slump to their seasonal low during the week of New Year's. Staffing firms remained very positive for growth prospects in 2015. Overall, about three-fourths of all service-sector contacts reported expectations that growth trends for their firms will remain positive over the next six months; none anticipated declines.\nThird District tourist areas reported mixed conditions for the early winter months. Several larger ski resorts have established a two-foot base of snow after a pre-Thanksgiving snowstorm staked them to an early season. However, unseasonably warm weather caused all the resorts to struggle to maintain good snow conditions and to attract winter tourists. The warmer weather and special events have kept the shore destinations reasonably busy during their off-season. However, many contacts remain concerned about the long-term impacts of casino closings in Atlantic City. Casino revenues were down about 10 percent in November year over year.\nPrices and Wages\nOverall, Third District contacts reported little change to the steady, slight pace of price level increases that was seen in other recent Beige Book periods. Manufacturing contacts have reported little change in their prices paid and prices received since the prior period, with about two to three times more firms expecting increases versus decreases. Among nonmanufacturing firms, contacts have reported fewer increases and more decreases of prices paid and prices received since the prior period, with little net difference. Manufacturers and construction firms continued to note wage pressures to attract skilled workers. Other contacts, including those from staffing firms, continued to note little significant change in wage pressures. Most contacts expect lower energy prices to broadly boost consumer spending, with more upside potential in Pennsylvania than downside risk to the state's energy-producing sectors.\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 14, 2015\nSales or revenues are ahead of year-earlier levels according to most First District business contacts in the manufacturing, retail, and advertising and consulting sectors. Commercial real estate markets are steady to improving and most residential real estate markets in the region continue to see price increases and sales declines. With a few exceptions, manufacturers and retailers are not increasing employment, while advertising and consulting firms continue to add modestly to headcounts. Cost pressures vary, with selective price increases planned by several respondents. The 2015 outlook is positive for almost all responding firms.\nRetail and Tourism\nRetail respondents this round report December or Q4 year-over-year comparable-store sales ranging from a low single digit decrease to an increase of slightly over 7 percent; the decrease reflects extra-strong year-earlier sales as a result of Hurricane Sandy rebuilding. Three of these contacts end their fiscal year on or near December 31, and preliminary analysis shows 2014 total sales down 1 percent to up almost 6 percent compared to 2013. While overall business is good, there has been some softening in the apparel categories; demand for home furnishings and home improvement categories remains strong. One contact characterizes the current daily retail environment as consisting of \"higher highs and lower lows.\" As in the previous round, some respondents say their prices remain steady, while others cite price changes for some items of plus or minus 1 percent. Based on their own manufacturing costs and vendor prices, one contact says that prices for fall 2015 merchandise will be up about 3 percent overall from fall 2014. Most retail respondents are optimistic about the outlook for 2015, given that business is currently good and consumer sentiment seems more positive, partly because the cost of oil is low.\nThe Boston area continues to enjoy a strong boost from travel-related spending. Hotel occupancy rates for 2014 are high and combined with higher average room rates, the preliminary estimate is that 2014 hotel revenues will be up almost 10 percent over 2013, which was a record-setting year. Through October, museum attendance was up 14 percent year-over-year, and contacts note many bookings of restaurant and museum space for year-end functions. 2015:Q1 will be stronger than 2014:Q1 due to more corporate meetings and conventions, and hotels have strong advance international bookings. The initial projection for 2015 is a 7 percent increase in hotel revenues, with a slight drop in occupancy rates from record highs compensated for by higher average room rates.\nManufacturing and Related Services\nOf the 11 manufacturing firms contacted this cycle, all but one report stronger sales. The exception is a frozen food producer who attributes the weakness to a highly competitive market. Otherwise, many contacts express surprise at how strong demand has been in 2014. For example, one firm says that sales of mail-related devices and services was up in the fourth quarter, reversing years of decline. A manufacturer of testing equipment says sales are strong overall but flat in China, a big change from historical annual increases of 20 percent. By contrast, a toy manufacturer says problems at West Coast ports has hurt sales as they couldn't get some products to market.\nOnly one of 11 contacts reports serious materials cost pressure; that contact cites sharp increases in chemical prices and says the firm will try to raise their sales prices to offset the increased costs. Four contacts indicate the strengthening dollar is reducing profits or raising costs for them overseas. A semiconductor manufacturer notes that the rising dollar reduced dollar sales by about 1.2 percent in 2014. No firms report any significant changes in inventories. Most are trying to lower inventory costs; however, a semiconductor maker wants to increase inventories but a tight supply chain makes that difficult.\nOnly one contacted manufacturer reports lower employment; they closed their direct sales channel which led to a 400-person reduction in headcount. A pharmaceutical firm is adding to New England employment. On the negative side, no firms report significant upward revisions to their hiring plans and five cite no significant headcount increases. A semiconductor manufacturer with sharply higher sales is increasing overtime rather than headcount. Capital expenditures are steady or up at all but one contacted firm; the exception is a publishing company which says it is considering reducing investment to build up a reserve for future investments. Some contacts do report unusually high levels of investment but generally say they are consistent with long-term plans and not due to high frequency changes in demand.\nThe outlook is positive for all respondent manufacturers, even though three contacts specifically mention Europe as a cause for concern. One semiconductor manufacturer predicts a fall in sales in 2015 but as payback for above-trend growth in 2014.\nSelected Business Services\nConsulting and advertising firms experienced varying positive levels of growth this past quarter. Growth ranges from moderate--for a high-end economic consulting firm as mortgage-backed securities litigation finally slows--to rapid, for a particularly well-positioned healthcare consulting firm. A second healthcare consulting firm experienced a strong rebound from a slow third quarter, as hospitals figured out their budgets and demanded more help with compliance. A strategy consulting firm reports strong year-over-year growth, but is down modestly from last quarter, as private equity due diligence work returns to historically normal levels. An advertising materials firm continues its trend of growing with the economy, and capped off the year with their strongest quarter in 2014.\nConsulting firms are seeing moderate to modest increases in costs, although the bulk of their expenses are in personnel and rent, and wages in these firms are generally increasing in proportion to the level of growth the firm is experiencing. Contacts generally adjust their prices up once a year to pass the majority of costs along, so early 2015 will see most firms' prices for these services increase from 0 percent to 5 percent. An advertising materials firm will have to adjust their cost structure in early 2015 in anticipation of a revision in UPS and FedEx freight calculations, but they are unsure how much resistance they will face as they try to pass this on to customers.\nAll contacts increased personnel modestly in 2014, and plan on further increases in 2015. Health care and economic analysis contacts cite plenty of slack in labor markets for consultants and analysts at all levels, but say that tech and data analyst positions continue to be competitive to fill, a sentiment echoed by an advertising materials contact who notes continuing difficulty filling e-commerce related positions. A strategy consultant notes decreased interest in strategy consulting by MBAs.\nAll contacts are bullish on the U.S economy, and are optimistic about business conditions for the next year. The high end economic consultant expects flat to modest growth for next year, but says the firm has been operating beyond capacity, and looks forward to the chance to \"absorb\" their recent success. Health care consultants have seven-figure deals in the pipeline, and anticipate high growth in 2015, despite general concern over federal budget and regulatory agencies efforts to continue rolling out the Affordable Care Act. Advertising materials and strategy consulting firms both anticipate continued robust growth for 2015, and cite only potential geopolitical turmoil as a risk factor.\nCommercial Real Estate\nCommercial real estate markets are steady or improving in the First District. According to contacts in Boston, office leasing fundamentals are unchanged since the last report and improved modestly on average compared with a year ago. Contacts continue to be impressed by the strength of demand for commercial property in Boston among foreign investors, who continue to pay prices that reflect highly optimistic expectations concerning growth in operating income. A regional lender to commercial real estate posted its best year yet in terms of loan volume, despite a very slow fourth quarter. A commercial real estate brokerage in Portland also had a record year in 2014 in terms of total revenues, a year that ended with very strong investment sales activity in the fourth quarter. Also in Portland, construction activity remains robust in the retail, residential, and hospitality sectors, while speculative office construction is not expected to occur for at least another year. In Providence, leasing deals under negotiation promise to boost absorption of office space in the near term, and office leasing fundamentals improved on net in 2014.\nConcerning the outlook, Boston contacts expect investment sales activity to remain robust, even if short-term or long-term interest rates increase in 2015. One Boston contact wonders whether growth among the city's tech start-up firms can be sustained in 2015, noting attendant risks for office demand in the Seaport District. The 2015 outlook is favorable for Portland's commercial real estate market and cautiously optimistic for the Providence market.\nResidential Real Estate\nClosed sales of single family homes declined in November in at least four of the six states in the First District compared to November 2013. Vermont saw an increase in sold homes; contacts in New Hampshire were unavailable. Sales also dipped in the condominium (condo) market in all responding states. Median sales prices rose in November in both single family and condo markets regionwide, with the exceptions of Maine, where prices decreased for single family homes, and Connecticut, where condo prices declined. In Massachusetts, prices have risen year-over-year in 25 of the last 26 months for single family homes and 17 of the last 18 months in the condo market. Contacts in Massachusetts say the driving forces are a shortage of inventory and steady consumer demand. The level of inventory heading into December in Massachusetts is the lowest in a decade, with only a 4.6 month supply for single family homes and a 2.0 month supply in the condo market. November is the 33rd consecutive month of year-over-year inventory decline in the Massachusetts single-family home market and the 49th consecutive decline in the condo market. In at least three other states, inventory declined in both the single family and condo markets; months of supply increased in Rhode Island. Realtors say they are cautiously optimistic because they remain busy; they hope interest rates will remain low and say markets will show further significant improvements only when high paying jobs become more available and new listings provide more options for buyers.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

National Summary

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"Beige Book: National Summary\nJanuary 14, 2015\nPrepared at the Federal Reserve Bank of San Francisco and based on information collected on or before January 5, 2015. This document summarizes comments received from business and other contacts outside the Federal Reserve System and is not a commentary on the views of Federal Reserve officials.\nReports from the twelve Federal Reserve Districts suggest that national economic activity continued to expand during the reporting period of mid-November through late December, with most Districts reporting a \"modest\" or \"moderate\" pace of growth. In contrast, the Kansas City District reported only slight growth in December. However, most of their contacts, along with those of several other Districts, expect somewhat faster growth over the coming months. The Dallas District indicated that growth slowed slightly during the reporting period and that several contacts expressed concern about the effect of lower oil prices on the District economy. Consumer spending increased in most Districts, with generally modest year-over-year gains in retail sales. Auto sales showed moderate to strong growth. Travel and tourism picked up during the reporting period. The pace of growth of demand for nonfinancial services varied widely across Districts and across sectors, but appeared to be moderate on balance. Manufacturing activity expanded in most Districts. Single-family residential real estate sales and construction were largely flat on balance across the Districts, while commercial real estate activity expanded. Demand for business and consumer credit grew. Credit quality improved a bit further overall. Agricultural conditions were mixed. Overall demand for energy-related products and services weakened somewhat, while the output of energy-related products increased.\nPayrolls in a variety of sectors expanded moderately during the reporting period. Significant wage pressures were largely limited to workers with specialized technical skills. Prices increased slightly, on balance, in most Districts.\nConsumer Spending and Tourism\nConsumer spending increased in most Districts, with generally modest year-over-year gains in retail sales. Contacts reported slight to modest gains in the Boston, Dallas, Philadelphia, and Cleveland Districts. Sales were solid in Atlanta. Moderate holiday sales growth exceeded expectations in Chicago and met expectations in San Francisco. General merchandise retailers in the New York District indicated that sales were largely sluggish and below plan for the holiday season. The Kansas City District reported that retail sales were lower than a year earlier, with a few retailer contacts noting a drop in sales of high-end products. In contrast, Philadelphia and San Francisco reported that high-end merchandise continued to sell well.\nAuto sales showed moderate to strong growth on a year-over-year basis, with Philadelphia, Cleveland, and Dallas at the lower end of this range, and Atlanta and Chicago at the higher end. Atlanta auto dealers noted that lower gas prices quickly boosted purchases of larger vehicles. However, some dealers in the St. Louis District reported excess inventories of luxury cars. Kansas City reported that auto sales decreased during the reporting period but remained higher than 12 months earlier. Auto sales were robust in some areas of the San Francisco District, but were somewhat below expectations in other areas.\nTravel and tourism picked up during the reporting period. The Boston, New York, Atlanta, and San Francisco Districts reported strong travel and tourism activity. Broadway theaters reported that attendance and revenues were up more than 10 percent from the same period in 2013. Tourism in the Richmond and Kansas City Districts was at or above normal seasonal levels. However, ski resorts in the Philadelphia District struggled to attract visitors in the midst of unseasonably warm weather. Warm December weather in the Minneapolis District also reduced winter tourism there.\nNonfinancial Services\nThe pace of demand growth for nonfinancial services varied widely across Districts and sectors during the reporting period, but appeared to be moderate on balance. Overall, nonfinancial service-sector firms in the Philadelphia and San Francisco Districts continued to report moderate growth. Most nonfinancial service firms in the Dallas District reported flat or higher demand. Activity at professional business services firms in Minneapolis and Kansas City increased. However, contacts in the Kansas City District expect that pace of growth to slow somewhat in coming months. The Boston District reported that some consulting and advertising firms grew rapidly. Demand for staffing services in the Dallas District was mixed, with some contacts reporting strong increases in demand and others reporting slight decreases. Freight volume in the Cleveland District increased during the reporting period, but contacts stated that freight transportation capacity constraints remained an issue. Freight volume in Atlanta, Kansas City, and Dallas held steady or increased on a year-over-year basis.\nManufacturing\nManufacturing activity expanded in most Districts. Philadelphia reported that manufacturing activity grew at a modest pace during the current reporting period, with a slight slowdown relative to the previous period. Reports regarding new orders and shipments in the Philadelphia District suggested some further slowing moving forward. Manufacturing shipments and new orders grew modestly in the Richmond District. Contacts at factories in the Cleveland District reported that demand increased a bit on balance. Manufacturing activity grew at a moderate pace in Boston, New York, Chicago, and San Francisco. However, a manufacturer in the Boston District indicated that congestion at West Coast ports had impeded its exports. Activity in the auto industry in the Chicago District remained a source of strength for the region. Atlanta reported that manufacturing activity strengthened overall. Minneapolis and Kansas City reported that manufacturing activity increased only slightly during the reporting period.\nReal Estate and Construction\nSingle-family residential real estate sales and construction were largely flat on balance across the Districts. Sales declined somewhat on a year-over-year basis in the Boston, Cleveland, Atlanta, Chicago, Minneapolis, Kansas City, and Dallas Districts. In the Philadelphia District, year-over-year existing home sales finished lower in November, but pending December sales in some areas were up notably over December 2013. However, builders of new homes in the Philadelphia District reported weak traffic for prospective buyers and fewer contract signings. San Francisco reported that overall home sales picked up in December. Richmond reported a modest increase in housing market activity. Home prices increased modestly, on balance, in the Boston, Philadelphia, Cleveland, Atlanta, Chicago, and Dallas Districts. The Cleveland, Atlanta, Chicago, Minneapolis, and Kansas City Districts all reported slightly slower single-family residential construction activity. However, the pace of single-family home construction increased in some areas of the San Francisco District.\nCommercial real estate activity expanded in most Districts. The Philadelphia District reported a modest pace of growth for commercial real estate leasing activity, and Boston reported improving conditions in commercial real estate markets overall. Commercial real estate activity in the Chicago and Kansas City Districts expanded at a moderate pace. The Dallas District noted that office leasing activity remained strong, but one contact noted a slight pullback in demand from oil and gas firms. Demand for apartments in the Dallas District also remained strong. New York City's co-op and condo market showed continued strength in the final quarter of 2014; apartment sales volume was down from the exceptionally high levels of the prior year but still fairly brisk, while selling prices were up moderately. Commercial construction activity increased in most Districts. Activity grew modestly in the Philadelphia District and a bit faster in the Atlanta and Chicago Districts. Atlanta cited the multifamily residential segment as a source of growth, while Chicago credited demand for industrial and office buildings. Commercial builders in the Cleveland District reported a moderate to robust increase for projects in the pipeline. Dallas reported that overall commercial construction was strong. San Francisco reported that multifamily residential construction was strong in many areas of that District and that retail, office, industrial, or infrastructure projects were widespread across that District.\nBanking and Finance\nDemand for business and consumer credit grew during the reporting period. Overall loan demand increased slightly in the Richmond, Kansas City and Dallas Districts. Philadelphia reported a modest increase in total loan volume. Contacts in the San Francisco District gave mixed reports regarding total loan growth. Demand for business credit in the Cleveland District grew overall during the reporting period. Demand for auto loans in the Chicago District grew moderately, and one contact noted a significant spike in credit card applications.\nCredit quality generally remained good, with overall reductions in loan delinquencies. According to the Philadelphia District, most of their financial industry contacts reported continued improvements in their customers' overall credit quality and in their own loan portfolios. However, high rates of severely distressed mortgages persisted in New Jersey and Pennsylvania. Contacts reported little change in their own lending standards. However, several Districts commented that their contacts indicated that stiff competition for high-quality borrowers was leading to lower underwriting standards among lenders more generally.\nAgriculture and Natural Resources\nAgricultural conditions were mixed during the reporting period. Contacts in the Richmond District reported that agribusiness conditions were better than in the same period a year earlier. The St. Louis District reported that winter wheat harvests are likely to be lower than average, largely reflecting planting delays in Illinois due to wet weather in October. The level of red meat output in the St. Louis District through November was below year-earlier levels, while hog and milk output in the Chicago District was higher than expected during the reporting period. Agricultural lenders in the Minneapolis District expected farm incomes in the fourth quarter of 2014 to come in below the level of the same quarter in 2013. Prices received by farmers in the Minneapolis District in December decreased from the previous year for corn, soybeans, wheat, hay, and milk; prices increased for cattle, hogs, eggs, and poultry. Agricultural growing conditions in the Kansas City District were generally favorable in December, and crop prices rose modestly. Kansas City reported that wheat prices increased modestly amid global supply concerns about limits on Russian grain exports and lower production estimates in Australia. The Dallas District reported that agricultural conditions improved slightly, but drought conditions continued in portions of Texas. Some areas of the Atlanta District saw a moderate improvement in drought conditions. Dairy farm profits in the San Francisco District increased significantly over the past year, but milk futures prices declined recently. Uncertainty regarding future water availability in California slowed new plantings of permanent crops.\nOverall demand for energy-related products and services weakened somewhat during the reporting period. The Kansas City and Dallas Districts reported that demand for oilfield services decreased, while the Atlanta District reported that growth in the supply of crude oil and natural gas continued to outpace demand growth. However, contacts in the San Francisco District reported that energy demand from manufacturers was solid. The overall output of energy-related products increased. Natural gas production in the Richmond District increased moderately during the reporting period, and the number of natural gas rigs in the Kansas City District increased. The pace of coal production in the St. Louis District during the reporting period exceeded that of the same period in 2013, and year-to-date coal production in the Cleveland District slightly exceeded prior year levels. The rate of coal production in the Richmond District remained slow during the reporting period. The Cleveland District reported that natural gas extraction activity remained at a high level. Oil drilling activity in the Kansas City District declined, and contacts expect that District's energy sector to slow further in response to lower energy prices.\nEmployment, Wages, and Prices\nPayrolls in a variety of sectors expanded moderately during the reporting period. The Chicago District reported that overall hiring increased, and the Minneapolis District indicated that labor markets continued to tighten. Contacts at staffing firms in the Philadelphia District reported continued moderate increases in hiring for both temporary and permanent positions. Labor demand in the Richmond District increased, and the Atlanta District saw job gains across most sectors. Payrolls increased at a modest pace in the Cleveland District, primarily in banking, freight services, and manufacturing. Manufacturing payrolls also expanded in the Richmond and St. Louis Districts. In contrast, the Boston District reported that manufacturers were not hiring. Reports of hiring in the Dallas District were slightly less widespread than in the previous reporting period, and a few energy firms in that District reported hiring freezes and layoffs.\nSignificant wage pressures continued to be limited largely to workers with particular technical skills. Indeed, the Philadelphia, Cleveland and Chicago Districts noted that upward wage pressures tended to be limited to experienced and technically-skilled personnel. The Richmond District reported that overall wage pressures were mild during the reporting period and that average wage growth in manufacturing slowed somewhat. The Dallas District noted fewer reports of rising wage pressures than in the previous reporting period. In contrast, Kansas City reported that wage growth accelerated slightly, with many contacts citing labor shortages.\nPrices increased slightly, on balance, in most Districts during the reporting period. Overall prices in the Cleveland, Chicago, and Dallas Districts were largely stable. Businesses in the Atlanta District continued to report little input cost pressure and limited pricing power. Boston indicated that cost pressures varied, with selective price increases planned by some respondents. Contacts in the Philadelphia District reported little change to the steady, slight pace of price increases. Overall prices increased modestly in the Kansas City and San Francisco Districts. The Richmond District reported that retail prices grew at a slower pace than in the previous reporting period, while price inflation in the non-retail service sector increased slightly. The Cleveland District reported scattered indications of declining prices for petroleum-based products and some metals. However, several Districts reported that the cost of a variety of construction materials increased.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Minneapolis

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"Beige Book Report: Minneapolis\nJanuary 14, 2015\nOverall, the Ninth District economy grew at a modest pace since the previous report. Increased activity was noted in consumer spending, professional services, manufacturing, and non-energy mining. Activity was level in tourism and mixed in commercial construction, commercial real estate, and agriculture. Energy, residential real estate, and residential construction were down. Labor markets continued to tighten since the previous report. While overall wage increases remained modest, there were examples of steeper increases in some regions and industries. Overall price increases were modest, but some decreases were noted.\nConsumer Spending and Tourism\nConsumer spending increased moderately. A Minneapolis area mall reported heavy traffic early in the holiday season, followed by steady traffic later in the season; overall traffic and sales were flat to slightly higher compared with the previous year. A Montana mall reported strong sales activity the week before Christmas, with overall sales up nearly 10 percent compared with a year earlier. A representative of a retailers' association was optimistic about the holiday shopping season in North Dakota, based on reports of strong traffic at stores. A poll of Minnesota retailers taken after Thanksgiving weekend showed that half of respondents expected the holiday season to finish better than the previous year, with the balance mostly expecting sales similar to 2013. An auto dealer in Minnesota noted strong sales in December, particularly for corporate vehicle fleets.\nOverall tourism was about level with a year ago. After an early snowfall and an early start to winter sports, warm weather reduced winter tourism in some areas during December. Low snowpack slowed snowmobiling and cross country skiing in northwestern Wisconsin, according to an official. Lift ticket and lodging sales were on par with a year ago, and future bookings were strong at a Montana ski resort. Tourism in western South Dakota was up slightly compared with a year ago.\nConstruction and Real Estate\nCommercial construction activity was mixed. In Sioux Falls, S.D., the value of November commercial permits increased from a year ago. In Billings, Mont., commercial permits decreased in value in November from a year earlier. Residential construction activity in the District was down compared with a year ago. In the Minneapolis-St. Paul area, the value of December residential permits decreased 9 percent compared with December 2013. In November 2014, residential permits dropped in the Bismarck, N.D., area from November 2013. November single-family residential building permits in Billings increased in value from the previous year, but multifamily permits decreased in value. The value of November residential permits in Sioux Falls increased from a year earlier.\nActivity in commercial real estate markets was mixed since the previous report. A real estate analytics firm noted that occupancy rates and revenue per available room were expected to drop from the third quarter to the fourth quarter of 2014 in the Minneapolis-St. Paul area. A Minnesota property manager noted increased leasing activity for retail and office properties during the reporting period. Residential real estate market activity decreased from a year earlier. In the Sioux Falls area, November home sales were down 12 percent, inventory increased 1 percent, and the median sales price increased 6 percent relative to a year earlier. November home sales in northwestern Wisconsin were down from a year earlier; the median sales price was down 6 percent. Minnesota home sales were down 13 percent in November from a year earlier, the inventory of homes for sale increased 5 percent, and the median sales price rose 3 percent. November home sales in the Bismarck area were about level with the same period a year ago.\nServices\nActivity at professional business services firms increased since the previous report. A law firm in the Minneapolis area noted a recent significant increase in merger and acquisition activity among small startup firms. A logistics consulting firm in Minnesota noted increased billings since the previous report. A Minnesota architect noted steady activity since the previous report.\nManufacturing\nManufacturing activity increased slightly. A manufacturing index released by Creighton University (Omaha, Neb.) increased in December from the previous month in Minnesota and South Dakota, but it fell slightly in North Dakota. However, the index remained at levels consistent with expansion in activity in all three states. Through October, manufactured exports in District states were up 1 percent compared with the same period a year earlier. A producer of commercial windows noted that demand for its products doubled in the last six months.\nEnergy and Mining\nThe energy sector slowed slightly in response to lower output prices. Oil and gas exploration activity decreased in late December compared with a month earlier in Montana and North Dakota. However, a company announced plans for four new diesel and natural gas processing plants in North Dakota. Mining activity increased slightly. District iron ore mines were operating at near capacity, with production in November slightly higher than its level a year earlier.\nAgriculture\nOverall agricultural conditions remained mixed since the previous report, with livestock and dairy producers faring better than crop farmers. According to the Minneapolis Fed's third-quarter (October) survey of agricultural credit conditions, 69 percent of respondents said farm incomes had fallen from a year earlier, while 63 percent reported decreases in capital spending. The fourth quarter outlook was weaker, as 81 percent of lenders expected farm incomes to fall, while 77 percent expected capital spending to decrease from a year earlier. Prices received by farmers in December decreased from a year earlier for corn, soybeans, wheat, hay, and milk; prices increased for cattle, hogs, eggs, and poultry.\nEmployment, Wages, and Prices\nLabor markets continued to tighten since the previous report. In Minnesota, a bank announced plans to hire up to 3,000 new employees companywide in 2015. A holiday seasonal retailer in the Minneapolis-St. Paul area reported increased difficulty finding workers. A contact in the Upper Peninsula of Michigan noted difficulty finding skilled construction workers. Lower oil prices led to an overall slowing in hiring in the energy producing regions of North Dakota and Montana, but labor conditions remained tight. Contacts noted a continued shortage of truck drivers. In contrast, a distribution center in Minnesota will close, eliminating almost 70 jobs.\nWhile overall wage increases remained modest, there were examples of steeper increases in some regions and industries. Some construction firms in the Minneapolis-St. Paul area noted that labor costs have increased recently. In addition, some managers at Minneapolis-St. Paul area restaurants indicated that they were increasing wages to attract employees. An assisted living facility in eastern North Dakota was offering $10,000 signing bonuses to fill positions for nurses, according to a report.\nOverall price increases were modest, but some decreases were noted. Minnesota gasoline prices at the end of December were 75 cents per gallon lower than in mid-November and a dollar per gallon lower than a year ago. Metals prices generally decreased since the previous report.\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 14, 2015\nThe Tenth District economy continued to grow slightly in December, and most contacts expected moderate growth over the coming months. Consumer spending slowed slightly as retail, auto, and tourism sales experienced a decline. However, contacts anticipated an increase in consumer spending in the coming months. District manufacturing and other business activity increased slightly with a moderate expansion of factory production for durable goods accompanied by sluggish factory production for nondurable goods. Real estate activity continued to edge up, with a moderate rise in commercial real estate activity offsetting seasonally sluggish residential real estate activity. Contacts in the banking industry reported a slight increase in overall loan demand, stable loan quality, and steady deposit levels. Agricultural growing conditions were favorable, with improved soil moisture in many parts of the District and a winter wheat crop that was rated in mostly good condition. The District's energy sector slowed in December and was expected to slow further in response to lower energy prices. Contacts in most industries continued to note a modest rise in overall prices with a slight acceleration in wages primarily due to labor shortages.\nConsumer Spending\nConsumer spending slowed slightly in December, but activity remained higher than a year ago with solid expectations for the coming months. Retail sales declined from the previous survey and were lower than a year ago. Several retailers noted a drop in sales of high-end products, although sales of home improvement items were steady. Expectations for future sales moderated but remained positive, and inventory levels were expected to drop considerably. Auto sales decreased, but at a slower rate than in the previous survey. However, auto sales remained higher than year-ago levels, and dealer contacts expected moderate growth in the months ahead. Auto inventories continued to rise, with further increases expected. Restaurant sales improved in December and were moderately above year-ago levels, with further growth anticipated in coming months. District tourism activity declined modestly, although activity was higher than a year ago and contacts expected strong growth for the remainder of the winter ski season.\nManufacturing and Other Business Activity\nDistrict manufacturing and other business activity increased slightly in December. Factory production expanded at a moderate pace, particularly for electronics, aircraft, and machinery products, while nondurable goods production remained sluggish. Contacts reported marked gains in factory shipments and new orders, and expectations for future factory activity remained at solid levels. Manufacturers' capital spending plans increased modestly from the previous survey, and export orders were expected to rise moderately. Transportation firms reported weaker activity, although sales were similar to year-ago levels with moderately higher expectations for future months. Professional, high-tech, and wholesale trade contacts noted a slight increase in sales from the previous survey, but the pace of growth was expected to slow somewhat in coming months. Most businesses reported solid growth in capital spending plans.\nReal Estate and Construction\nDistrict real estate activity continued to edge up as stronger commercial real estate activity offset seasonally sluggish residential real estate activity. Expectations for overall real estate activity were positive. Residential home sales decreased moderately compared to the previous survey period, partially due to typical seasonal sales patterns. Sales of low- and medium-priced homes continued to outpace sales of higher-priced homes; however, a few contacts reported an increasing volume of mid- to higher-priced homes sales. Home prices continued to increase modestly since the previous survey period as inventories fell further. Expectations for residential home sales and prices were positive as inventories were anticipated to continue to decline modestly. Residential construction activity decreased modestly, and traffic of potential buyers was flat. Housing starts fell modestly, and sales of construction supply materials were moderately below previous survey levels. Commercial real estate activity continued to increase at a moderate pace, and contacts reported lower vacancy rates and higher absorption rates, completions, sales, prices, and rents. The commercial real estate market was expected to continue to expand moderately over the coming months.\nBanking\nBankers reported a slight increase in overall loan demand, stable loan quality, and steady deposit levels through December. Half of respondents reported increasing demand for commercial and industrial loans, while the other half noted steady demand. Most respondents reported steady demand for agricultural, consumer installment, and commercial real estate loans. Demand for residential real estate loans remained mixed. Most bankers indicated loan quality was unchanged compared to a year ago, and a majority of bankers expected the outlook for loan quality to remain the same over the next six months. Credit standards remained largely unchanged in all major loan categories. In addition, deposit levels remained mostly constant, with more bankers reporting increasing deposit levels than during the last survey.\nAgriculture\nAgricultural growing conditions were generally favorable in December, and crop prices rose modestly. Although some western areas of Kansas and Oklahoma remained dry, scattered rains improved soil moisture in many parts of the District and the winter wheat crop was rated in mostly good condition. Wheat prices increased modestly amid global supply concerns due to limits on Russian grain exports and lower production estimates in Australia. Corn and soybean prices also rose modestly since the last survey period due, in part, to a slight downward revision in 2014 U.S. production estimates. In the livestock sector, weaker export demand for pork placed downward pressure on hog prices. High feeder cattle prices prompted some producers to feed cattle to heavier weights to boost profit margins.\nEnergy\nThe District's energy industry slowed in December. Most respondents reported lower drilling activity, and demand for oilfield services fell. Oil rigs decreased marginally while natural gas rigs increased. Future drilling activity, employment, and capital expenditures were projected to be significantly lower in response to lower oil prices. The price of oil dropped to half of its June peak and was projected to fall further through early 2015. Firms' opinions were mixed about oil prices one year out, but on average they expected a rebound of 15 to 20 dollars per barrel from year-end 2014 levels. Moderate temperatures and higher production pulled down the natural gas spot price over the reporting period, with future decreases expected. A few firms reported increased difficulties accessing credit due to lower oil prices.\nWages and Prices\nPrices in most industries continued to grow modestly in December, and wage growth accelerated slightly, with many contacts citing labor shortages. Retail prices rose moderately, and restaurant menu prices continued to increase due to higher input costs. Manufacturers' raw materials prices increased, although at a much slower pace, while finished goods prices were unchanged from the previous survey period. Transportation input prices were flat in December after declining during the previous survey period, while selling prices in the sector remained unchanged. Construction materials prices remained steady, but most contacts anticipated a slight rise in the months ahead. Wages in the retail sector continued to increase during the holiday season, and transportation contacts noted higher wages due to difficulties acquiring CDL drivers. Nearly all contacts reported increased labor costs as a result of new healthcare regulations. Respondents noted a particular shortage in skilled machinists, engineers, IT developers, and a sustained shortage of truck drivers.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Atlanta

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"Beige Book Report: Atlanta\nJanuary 14, 2015\nBusiness contacts indicated that economic activity continued to improve for the Sixth District since the previous report. The outlook among the majority of contacts was positive with most expecting higher growth for early 2015.\nDistrict merchants noted holiday sales levels were solid for November and early reports for December indicate much the same. Automobile sales continued at a solid pace. The hospitality sector reported a strong holiday season, continuing the level of activity that it had been experiencing all year long. Residential housing brokers and builders noted that home sales growth was flat to slightly down from the previous month while home prices continued to appreciate. Existing home inventories were flat from last month and new home inventories were flat to slightly up. Commercial contractors described construction activity as improving, with the multifamily segment of the market noted as particularly strong. Manufacturers indicated that overall activity strengthened since the previous report. On balance, banking contacts noted that loan demand improved. The District continued to experience job gains across most sectors. Similar to the previous report, contacts noted only mild cost pressures.\nConsumer Spending and Tourism\nDistrict retail contacts appeared upbeat heading into the holiday season. While sales on Black Friday were adequate, merchants indicated that pre-Thanksgiving discounting, online shopping, and stores opening on Thanksgiving Day, helped November end with solid results. Early reports for December appeared strong and merchants expect the additional day of shopping between Thanksgiving and Christmas to bode well for year-end results. Motor vehicles sales were robust as demand continued to grow. District auto dealers noted that customers were reacting immediately to lower gasoline prices by purchasing new, larger vehicles.\nReports on tourism and business travel remained positive from late November through December. Tourism industry contacts reported a strong holiday season with high occupancy numbers at hotels and resorts. Hospitality contacts continued to report additional capital expenditures on tourism infrastructure as well as strong advanced bookings for the first two quarters of 2015 in the hotel and conference segments.\nReal Estate and Construction\nMost District brokers indicated that home sales fell short of their plan for the period. Many contacts noted that home sales were flat or down slightly compared with a month earlier. Brokers continued to report modest home price appreciation. The majority of brokers indicated that inventory levels remained flat from the prior month's level and that buyer traffic was flat to down over the same period. Brokers indicated that they expect home sales to remain flat or increase slightly over the next three months.\nIncoming signals from District homebuilders were relatively unchanged since the last report. Contacts characterized construction activity as flat from the previous month and new home sales were flat to down slightly over the same period. Most builders indicated that the inventory of unsold homes was flat to slightly up compared with a month earlier. Modest home price appreciation continued to be reported. Builders' outlook for new home sales and construction activity over the next three months was fairly positive, with most indicating that they expect activity to be flat to slightly up.\nCommercial real estate brokers across the District continued to report improving demand, though they cautioned that the rate of improvement varied by metropolitan area, submarket, and property type. Commercial contractors noted continued strength in apartment construction and that the pace of nonresidential construction activity continued to increase modestly. The outlook among District commercial real estate contacts remains fairly optimistic.\nManufacturing and Transportation\nDistrict manufacturers indicated that activity was solid, as the strong growth noted in the previous period continued. New orders and production remained at healthy levels, and contacts reported notable increases in employment. Supplier delivery times slowed and commodity prices increased modestly. Optimism among manufacturers rose notably since the last reporting period, with over half of contacts expecting productions levels to increase over the next three to six months.\nDistrict transportation contacts reported slightly higher activity from late November through December compared with year earlier levels. Trucking and logistics contacts noted significant increases in demand; however, capacity constraints due to a lack of drivers continued to hinder growth. Railroad contacts reported double-digit increases in shipments of grain, petroleum products, metallic ores, and military, machinery and transportation equipment. However, total rail traffic was flat compared with the previous reporting period. Maritime shippers cited significant capital expenditures in vessel capacity, including barges and petroleum tankers, as well as increased investments in LNG-powered ships. District ports experienced significant growth in container traffic compared with the same period last year. The majority of transportation contacts expect higher growth in 2015.\nBanking and Finance\nCredit conditions were largely unchanged from the previous reporting period. Contacts reported large businesses had easy access to credit; small businesses were experiencing small improvements in their ability to access credit. Loan demand increased among most lines of business. Loan pricing and structure remained competitive.\nEmployment and Prices\nBusinesses reported that the reluctance to hire was waning somewhat in the face of continued increases in demand. In November, Sixth District states added 49,500 net jobs. Job gains were fairly widespread across sectors, though retail contributed the most jobs. The unemployment rate in the Sixth District declined 0.2 percentage point to 6.4 percent in November. Reports of high turnover rates were more prevalent since the previous report, with many firms offering improved benefits, notably health care, as an employee retention device. In addition, the conversion of part-time workers to full-time accelerated as businesses tried to meet increased product demand and boost employee loyalty.\nBusinesses continued to cite little input cost pressure and limited pricing power, with some notable exceptions in commercial construction, transportation, real estate, and food. The Atlanta Fed's December survey of business inflation expectations indicated that firms' year ahead unit cost expectations were essentially unchanged at 1.9 percent. Contacts also expressed a slight shift in their assessment of labor cost pressures over the coming year with a growing number of firms reporting acceleration in compensation budgets for 2015. Some firms conveyed they were increasing starting pay or planning to move above minimum wage in an effort to attract and retain their workforce. Conversely, several employers also reported that where possible, they were holding down base pay and instead adding benefits or performance bonuses.\nNatural Resources and Agriculture\nSupply of crude oil and natural gas continued to outpace demand, leading to high inventory levels across the Gulf Coast. Industry contacts in the energy sector reported that the downturn in the price of oil has influenced their outlook and strategic planning for 2015, including a heightened focus on cost management, more prudent investments, and faster, more efficient drilling techniques. Exploration and production firms shared plans to continue drilling operations across the Gulf Coast and in Louisiana in 2015, though they intend to approach projects more cautiously. The same goes for oil service companies in the region, which are evaluating cost reduction strategies if low energy prices are sustained.\nWhile the District experienced varying degrees of drought ranging from abnormally dry conditions to a few areas of severe drought, some areas of Alabama, Georgia, and the Florida panhandle saw some moderate improvement in drought conditions. Protein producers that rely on corn for feed reported improved margins because of continuing low corn prices. The most recent cotton and orange crop forecasts were slightly higher than last season's production.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Dallas

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"Beige Book Report: Dallas\nJanuary 14, 2015\nThe Eleventh District economy expanded at a slightly slower pace over the past six weeks than in the previous report. Manufacturing activity continued to increase. Retailers and automobile dealers saw steady or higher sales. Growth in loan demand picked up, and demand for nonfinancial services was stable or improved. Home sales grew, and apartment and office leasing activity remained strong. Demand for oilfield services declined modestly, while agriculture conditions improved a little. Upward price and wage pressures moderated slightly. Employment in most industries held steady, but there were some layoffs. There was more uncertainty and generally less optimism in outlooks than in the prior report, with contacts across several industries expressing concern about the impact of lower oil prices on the District economy.\nPrices\nMost responding firms said prices held steady over the last six weeks, with fewer instances of firms raising prices than in the previous report. Retailers and auto dealers noted steady prices, and accounting and legal firms said billing rates were unchanged since the prior report but higher than a year ago. Prices and fees generally moved up across the staffing industry in part due to higher costs. One primary metals manufacturer said they were finally able to pass through a slight price increase, while food and fabricated metals producers noted continued increases. Other manufacturers generally reported stable prices. Cement, glass, and brick manufacturers noted plans to raise prices in 2015. There were reports of lower cotton, dairy, and meat prices, and a few contacts said energy firms were requesting discounts on machinery pricing.\nThe price of West Texas Intermediate crude oil fell sharply over the reporting period, as global supply growth met softer international demand. The price of natural gas dropped, as did gasoline and on-highway diesel prices.\nLabor Market\nReports of hiring were slightly less widespread than in the prior report, and there were scattered reports of layoffs. A few energy firms reported hiring freezes and layoffs. Staffing firms, auto dealers, and cement, high-tech, and fabricated metals manufacturers reported increased payrolls. Retailers mostly noted flat employment levels, but one contact reported ongoing hiring in line with sales growth. Construction contacts continued to report a tight labor market.\nReports of rising wage pressures were less prevalent than in the previous report. Staffing services firms noted continued wage pressures, particularly for certain sectors and positions, although one firm said companies continued to resist wage increases. Upward wage pressure on semi-skilled positions in manufacturing eased, but contacts noted continued pressure for high-skilled labor mostly in high-tech and food manufacturing. Airlines reported higher salaries, and one brick manufacturer said they plan to increase wages in the near future.\nManufacturing\nMost manufacturers noted stable or higher demand since the last report, and outlooks were positive. Reports on demand growth from lumber, cement, glass, and brick manufacturers were mixed, but all contacts noted that business was up from a year ago. Primary metals producers saw a seasonal dip in demand, while fabricated metals manufacturers continued to note increases.\nHigh-tech manufacturers said overall demand held steady over the last six weeks, but they noted that demand for high-speed processors, in particular, picked up recently. Respondents expect sales growth in 2015 to be slower compared with the past several years, but to remain well above the long-term trend. They also anticipate growth in electronic devices to outperform the rest of the industry.\nFood producers said demand was unchanged over the reporting period and flat from a year ago. Chemical producers reported higher production rates in November compared with year-ago levels. Gulf Coast chemical manufacturers, who use natural gas to fuel their operations, said the lower price of oil has narrowed their competitive edge over their foreign competitors that rely more on oil for production. This development, combined with weaker global demand and a strong dollar has led to a decline in exports of chemical products. Refinery utilization rates increased, and outlooks for refiners and chemical manufacturers remained positive.\nRetail Sales\nRetail demand grew during the reporting period, but reports on the pace of growth were mixed. Two national retailers said Texas' sales performance was a bit slower than the nation overall, while a third national retailer noted Texas was in line with the national average. Black Friday weekend sales were in line with or above retailers' expectations. Contacts reported uncertainty in their outlooks for 2015 partly due to lower oil prices and possible price declines for some meats, produce, and pharmaceuticals.\nAutomobile sales held steady or increased slightly, and demand was up from a year ago. Inventories were generally high because of the low cost of carrying inventory. Some auto dealers were front loading inventory of Ford trucks as the new model will be slow to roll out. Outlooks for 2015 were positive.\nNonfinancial Services\nMost nonfinancial services firms reported flat or higher demand and positive outlooks. Reports on demand for staffing services were mixed, with some contacts noting strong increases, while others noted a slight decline. One staffing firm noted a slowdown in hiring in Houston. All skills were in demand, with one contact reporting a significant increase in orders from the engineering, IT, and finance sectors. The accounting sector continued to operate at high levels of activity, and year-over-year growth was nearly in the double digits according to most responding firms. Demand for legal services increased slightly, but one firm said their Houston office experienced a slight dip in activity. Litigation activity remained slow. Bankruptcy work was beginning to pick up, and one contact reported that an oil and gas firm was looking into bankruptcy options. Legal services to financial practices, particularly in private equity, continued to grow but contacts said that activity may slow next year if oil prices remain low.\nTransportation service firms said overall cargo volumes held steady or increased. Shipping cargo volumes increased, boosted by notable growth in steel tonnage, and trucking firms reported stable demand. Airlines said passenger demand held steady since the previous report but was up slightly from a year ago. Domestic airline demand remained strong, and outlooks were positive.\nConstruction and Real Estate\nHome sales grew at a steady to slightly slower pace since the last report, and sales were generally even with last year's levels. Builders were slowly building up their inventory of speculative homes, but some contacts said that their appetite for land has declined. Home prices continued to edge upwards, and several respondents reported pushback from buyers on pricing. Outlooks were cautiously optimistic. Apartment demand remained strong. Occupancy rates, although still high, saw a slight seasonal dip. Rent growth stayed solid in Dallas and Houston, but was starting to cool off in Austin. Outlooks were generally positive, but some contacts said they had revised down their 2015 outlook for Houston.\nOffice leasing activity remained strong, but one contact noted a slight pull back in demand from oil and gas firms. Industrial demand was solid in Houston but slowed in Dallas. A few contacts said that investors are taking a wait-and-see approach because of the steep decline in oil prices. Outlooks were positive, but there was some concern about the elevated level of construction in the Houston office and Dallas industrial markets.\nFinancial Services\nOverall loan demand accelerated slightly since the previous report. Growth in consumer lending picked up, and business lending outside of the oil and gas sector increased. In contrast, community banks in areas focused on oil and gas said they were seeing some signs of slowing. Demand for multifamily housing continued to drive growth in commercial real estate lending, but one contact said that their lending standards are becoming pickier. Outlooks remained optimistic, but contacts were concerned that sustained low oil prices may slow Texas growth in 2015.\nEnergy\nDemand for oilfield services fell in the Eleventh District. Declines were concentrated in the Permian Basin as firms moved away from traditional vertical drilling, but the Eagle Ford and other oil basins in the District also saw a slight drop off in activity. Outlooks for the first half of 2015 are very uncertain and significantly weaker than in the prior reporting period, with firms expecting anywhere from a 15 to 40 percent decline in demand for their services.\nAgriculture\nAgricultural conditions improved slightly, but large portions of the state remain in drought. Harvesting has wrapped up for all row crops, except cotton, which has been slow this year and is nearing completion. Winter wheat has been planted and some areas look good with ample moisture received, while other areas need more rain to yield a decent crop and good grazing conditions. Cattle prices have declined slightly but remain near record highs. Dairy prices are markedly lower due to increased global production.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Cleveland

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"Beige Book Report: Cleveland\nJanuary 14, 2015\nThe economy in the Fourth District expanded at a modest pace during the past six weeks. Most of our contacts have a positive outlook for the new year, and they expect demand for their products and services to remain at current levels or rise. Manufacturers reported that business activity increased at a modest rate. Demand for nonresidential construction strengthened, while the residential market was stable. Retail spending during the holiday shopping season was slightly above year-ago levels, and year-to-date auto sales posted moderate gains compared to 2013. District coal production is up slightly year-over-year, while shale gas activity remains at a high level. Freight shipments were strong, but capacity issues are limiting growth. The demand for business and consumer credit moved higher.\nPayrolls increased at a modest pace, primarily in banking, freight services, and manufacturing. Staffing firms reported that the number of job openings and placements in energy and manufacturing companies had risen slightly. Upward pressure on wages is limited to experienced and technically skilled personnel across industry sectors. Overall, input and finished goods prices were stable. There were scattered reports of declining prices for metals and petroleum-based products and rising prices for some building materials.\nManufacturing\nFactory representatives reported that demand ranged from stable to showing a moderate improvement during the past six weeks. Any declines in orders were attributed to seasonal factors. Year-to-date results were generally better compared to those in 2013; several producers cited growth in the construction, shale gas, and auto industries as contributing to higher revenues. Our contacts are fairly optimistic and expect moderate to strong growth in 2015, though some expressed concern about weakening foreign economies and a decline in the price of oil. The seasonal slowdown in steel shipments that typically begins in November was slightly deeper than expected. A few contacts believe that customers are waiting for steel prices to stabilize at a lower level. Due to pricing and market uncertainties, some steel producers are reducing their finished goods inventory. Year-to-date auto production through November at District assembly plants was more than 4 percent higher compared to the same period in 2013.\nA large majority of factory representatives reported that capital spending in fiscal year 2015 will be moderately higher than prior-year levels, with monies being allocated mainly for new IT and capital equipment. Raw material prices were stable or lower during the past six weeks; declines were seen in steel, copper, and petroleum-based products. Finished goods prices held steady. New hiring continued at a modest pace, mainly in production and sales. Wage pressures are limited to high-skilled production workers, engineering, IT, and computer system personnel.\nReal Estate and Construction\nYear-to-date sales through November of new and existing single-family homes were slightly below levels seen in 2013, while the average sales price was moderately higher. New-home contracts were mainly in the move-up price-point categories. Since our last report, single-family construction starts were down slightly, while the number of single and multifamily building permits issued moved mildly higher. Homebuilders pointed to a scarcity of lots in strong markets and stringent mortgage standards as factors that are constraining sales activity. The outlook for the new year is best described as cautious; while most respondents are expecting some growth, none are projecting robust activity. A majority of builders announced price increases averaging 3 percent, which will go into effect at the start of 2015. These increases will mainly cover rising costs, including higher rates from subcontractors.\nNonresidential builders reported pipeline activity generally ranging from moderate to robust, and they indicated that the level of activity has increased relative to a year ago. One builder commented that his customers feel more certain about risk-taking on high-value projects. For the most part, contractors are satisfied with their backlogs going into 2015. Market demand is broad based, although demand from manufacturers, healthcare providers, and higher education is strongest. There has also been a pickup in requests for commercial space. Builders are optimistic in their outlook for 2015. We heard a few comments about widening margins and growing opportunities for developing spec buildings. Several contractors reported that they are increasing their capital budgets for 2015, mainly to purchase heavy machinery.\nBuilding materials prices were stable other than for drywall and concrete, which have increased. The diesel fuel surcharge is being reduced or eliminated. New hiring has diminished appreciably since early November due to the onset of winter weather. Several contractors reported that they are starting seasonal layoffs. Unless business conditions deteriorate, hiring will resume later in the first quarter. Wage pressures are limited to craft workers and more experienced engineers and project managers. Subcontractors are pushing through rate increases at a faster pace than general contractors had anticipated; these increases are needed to cover rising costs, including for labor and to widen margins.\nConsumer Spending\nRetailers reported that revenues from this year's holiday shopping season were slightly higher than those in 2013. Product lines in highest demand included apparel, electronics, and physical fitness. Retailers continued to run a significant number of promotions, which for some store chains is narrowing profit margins. Reports on the impact of lower gasoline prices were mixed. Many of our contacts were uncertain about sales expectations for the first quarter of 2015. Those making projections believe that same-store revenues will be only mildly higher year-over-year. Vendor and shelf prices held steady, other than anticipated increases for dairy products. Capital spending for 2014 was in-line with budgeted amounts. Capital plans for fiscal year 2015 are still in process, but most retailers are projecting little change in budgeted amounts. Hiring is limited to new store openings.\nYear-to-date sales through November of new motor vehicles were about 5 percent higher compared to the same time period in 2013. Across many regions of the District, the share of SUV and truck sales was at its highest level of the year during November. Luxury vehicle purchases also picked up. These strong sales were mainly attributed to declining gasoline prices. Our contacts are satisfied with current inventory. Looking at 2015, dealers anticipate that the year-over-year change in unit volume will be positive, but increases will not be as strong as in 2014. There is some uncertainty as to the impact of sustained lower gasoline prices on new motor vehicle transactions. Little change in payrolls is expected during the winter months. Dealers continue to have difficulty finding skilled labor, especially technicians.\nBanking\nBankers reported that demand for business credit exhibited modest to moderate growth during the past six weeks. While demand was described as broad based, it was strongest for commercial real estate and commercial and industrial loans. Consumer credit demand moved slightly higher, especially for auto loans and home equity products. Households are making marginally greater use of credit cards. Though the pricing environment remains competitive, interest rates were mainly steady for business and consumer credit and for residential mortgages. Many of our respondents noted that activity in their residential mortgage business has declined considerably. One banker reported that nonbank entities seem to be the biggest source of growth in residential mortgages and that it is becoming less and less a part of his business. Delinquency rates were stable or improving across loan categories. No changes were made to loan-application standards since the last report. Core deposits were described as good or strong and growing. A majority of bankers indicated that payrolls are rising at a slight pace, especially in the areas of commercial lending, risk management, and regulatory compliance. A few reported that they are beginning to feel some wage pressure and expect that it will intensify in 2015.\nEnergy\nYear-to-date coal production across the District is slightly above prior-year levels. Output is projected to increase in Pennsylvania and northern West Virginia with no material change expected in eastern Kentucky and Ohio. Low natural gas prices have been reducing demand for thermal coals domestically. Spot prices for steam and metallurgical coal have declined since our last report. Activity in the Marcellus and Utica shale formations remains at a high level. However, a sustained decline in oil and gas prices may pose some downside risk to drilling and production, and it is uncertain what the effect will be on hiring and wages in the near term. Overall pricing for materials and equipment is down slightly during the past six weeks. Capital spending is projected to decline in 2015.\nFreight Transportation\nFreight volume increased since our last report, with demand being described as broad based. Profit margins improved due to lower diesel fuel prices. Although capacity constraints remain an issue industry-wide, carriers are encouraged by amendments to the hours-of-service rules that were included in the recently passed federal omnibus bill. Our contacts are optimistic in their outlook and they believe that strong growth trends should continue into 2015. A pickup in the number of consolidations within the freight industry is expected to continue. Little change in prices for parts and tires was reported. Capital spending in 2015 is projected to be strong, with monies being allocated for replacement and expansion. Hiring drivers is an ongoing process and industry executives agree that their ability to attract and retain truck drivers is critical to their ability to expand capacity.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Chicago

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"Beige Book Report: Chicago\nJanuary 14, 2015\nGrowth in economic activity in the Seventh District remained moderate in December, and contacts expected growth to continue at a similar pace in 2015. Consumer spending, business spending, and manufacturing production all increased moderately, while construction and real estate activity increased modestly. Credit conditions were little changed on balance. Prices were also little changed with the exception of energy and some agricultural commodities.\nConsumer Spending\nGrowth in consumer spending remained moderate in December. Overall, holiday sales slightly exceeded expectations as consumers benefitted from generous promotions, advantageous weather conditions, and lower gasoline prices. Growth was robust for apparel, footwear, hobby items, specialty gifts, sporting goods, and toys, but was slower for the food and beverage sectors. Light vehicle sales increased steadily in recent weeks. Auto dealers reported that accommodative financing terms continued to spur sales and that lower gas prices were leading consumers to shift purchases toward trucks and SUVs and away from cars. In general, retailers expect sales growth to remain moderate in 2015, supported by the improving job market and the prospect of continued lower energy prices.\nBusiness Spending\nBusiness spending also continued to grow at a moderate pace in December. Most retailers reported comfortable inventory levels, though some noted that stocks of winter-related items were slightly elevated because of the mild weather in the early winter. Inventories also were at comfortable levels for most manufacturers, though one contact noted that inventories of farm tractors were elevated, leading agricultural equipment manufacturers to offer special financing and extended warranty programs to lure buyers. Capital expenditures and spending plans continued to rise. Outlays were aimed primarily at replacing industrial and IT equipment, though many contacts also reported spending for capacity expansion. Hiring increased and contacts expected job growth to continue in the coming year. There was ongoing strong demand for skilled workers, particularly for those in professional and technical occupations and skilled manufacturing and building trades. In addition, a staffing firm reported an increase in demand for its services from small- and medium-sized businesses.\nConstruction and Real Estate\nConstruction and real estate activity increased modestly in December. Demand for residential construction was little changed in both the single- and multi-family markets. Although homebuilders were optimistic about the overall economy, many were concerned that the housing sector would continue to lag in 2015. Home prices and residential rents both increased, while the pace of home sales slowed. Real estate contacts forecasted flat or modest growth in home sales in 2015. Nonresidential construction increased, driven in large part by demand for industrial and office buildings. Commercial real estate activity expanded broadly--vacancies ticked down, rents rose, and leasing of industrial buildings, office space, and retail space all increased.\nManufacturing\nManufacturing continued to grow at a moderate pace in December. Activity in the auto, aerospace, and energy industries remained a source of strength for the District. Demand for inputs for oil and gas production remained strong, boosted by projects begun before the fall in oil prices. An energy industry contact noted that given the typical lag between prices and production, activity should begin to slow in the second quarter of 2015. Demand for steel rose steadily, with expectations for continued growth in 2015. Most specialty metals manufacturers reported steady gains in orders and solid order books, and some contacts indicated a surprisingly high level of activity during the typically slow holiday season. In contrast, demand for heavy machinery grew slowly, though there were marked differences across product categories: Sales of construction machinery continued to grow at a moderate rate, while sales of agricultural and mining equipment remained weak.\nBanking and Finance\nCredit conditions were little changed on balance in December. Financial market volatility stabilized after spiking during the prior reporting period, while equity markets moved higher. Business loan demand was steady, and credit line utilization remained elevated for middle market firms. Banking contacts noted the fall in oil prices as a source of medium-term uncertainty for business lending, with downside risk to loan quality for firms in the oil supply chain. Demand for auto loans increased in line with expectations, and a contact noted a significant spike in credit card applications. In general, banking contacts viewed current conditions as favorable for continued growth in business and consumer lending in 2015.\nPrices and Costs\nWith the exception of falling energy prices, cost pressures were little changed in December. Most contacts reported no change in prices, while retailers noted some downward price pressure. Of the few contacts reporting price increases, most cited rising labor costs as a driver. Many contacts noted that skilled labor was in short supply, and wage pressures continued for such workers. Wage pressures remained less pronounced for unskilled workers, but a staffing firm noted that it was working with clients to raise contract wages in an effort to reduce labor force turnover. Non-wage costs changed little on balance, though a number of contacts again reported rising healthcare costs.\nAgriculture\nCorn and wheat prices rose during the reporting period, while soybean prices were flat. Wheat prices were up because of drought and cold snaps in areas producing winter wheat and because of limits by the Russian government on exports. The record harvest had created concerns about sufficient crop storage space, but reports indicated that enough space was available. Shipping delays eased too, allowing stocks to move more smoothly to end users. The late extension of beneficial tax deductions will give a boost to after-tax agricultural income in 2014. Low crop prices led farmers to focus on minimizing costs instead of maximizing output in 2015, so that they purchased fewer and lower cost inputs. In addition, rental terms for some cropland were under pressure because farmers would not make enough to cover their costs next year. Ethanol margins compressed with the drop in oil prices. Hog and milk output was higher than expected, leading to further price decreases. Cattle prices were little changed, but became more volatile.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

New York

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"Beige Book Report: New York\nJanuary 14, 2015\nGrowth in the Second District's economy has continued at a moderate pace since the last report. Businesses report that cost pressures overall have abated further, though there are some reports of increased wage pressures; selling prices remain generally stable to up slightly. In general, businesses report that conditions have improved somewhat since the last report. Labor market conditions appear to have strengthened further in the final weeks of 2014. Retailers report that holiday season sales were somewhat disappointing and little changed from 2013 levels, though sales picked up toward the latter part of December. Auto dealers characterize sales as sluggish in November, though both picked up, to varying degrees, in December. Tourism remained fairly robust in late 2014, and consumer confidence climbed to a multi-year high. Housing markets were mixed but, on balance, somewhat stronger in the final weeks of 2014; multi-family construction has been fairly brisk. Office markets have been generally steady, while the market for industrial space has strengthened a bit. Finally, banks report increased loan demand--particularly from the commercial sector--as well as narrowing loan spreads; delinquency rates continued to decline for commercial loans and mortgages, but picked up for residential mortgages.\nConsumer Spending\nGeneral merchandise retailers indicate that sales were generally sluggish and below plan for the holiday season overall. However, most retail contacts noted that, while November and early December were sluggish, sales did pick up toward the latter part of the month, especially in the week after Christmas. The mid-November snowstorm that hit large parts of metropolitan Buffalo shut down many retailers for a number of days; in general, contacts in upstate New York note that sales picked up somewhat in December (especially toward the end of the month) but were little changed from the prior holiday season. Similarly, two major retail chains report that holiday-season sales across the region were below plan and little changed from 2013 levels, though both noted that sales picked up toward the latter part of December--especially after Christmas. Overall, prices were described as little changed from a year earlier; some contacts report heavier discounting this past holiday season than in 2013, while others characterize it as about the same. Post-holiday inventories are generally said to be in fairly good shape.\nReports from auto dealers across upstate New York indicate that sales were sluggish in November but picked up somewhat in December. Rochester-area dealers note that new vehicle sales weakened substantially in November but rebounded in early December, while used car sales improved. Buffalo-area dealers paint a more mixed picture: new auto sales have not rebounded substantially from November's weather-depressed levels, though sales of used vehicles have picked up somewhat. Auto dealers in both areas note that both wholesale and retail credit conditions remain favorable.\nConsumer confidence in the region climbed in December, based on the Conference Board's survey of residents in the region. Confidence rose to a 10-month high in New York State and to a more than one-year high in the broader Middle Atlantic region (NY, NJ, PA). Tourism continued to be strong in late 2014. Broadway theaters report that attendance and revenues accelerated in December, and were up more than 10 percent from comparable 2013 levels. Manhattan hotels also report that business has continued to be brisk toward the end of the year.\nConstruction and Real Estate\nThe District's housing markets have shown signs of picking up in the closing weeks of 2014. Real estate contacts in western New York State indicate that the housing market has gained some momentum in the final months of 2014, particularly for trade-ups to mid-priced homes. New York City's co-op and condo market showed continued strength in the final quarter of 2014: apartment sales volume was down from the exceptionally high levels of a year ago but still fairly brisk, while selling prices were up moderately.\nNew York City's residential rental market has been mixed: Rents in Manhattan and Brooklyn have picked up somewhat and are up roughly 5 percent from a year ago, while Queens rents have been fairly steady. Residential rents elsewhere around the New York City metro area are reported to be up 4-6 percent from a year ago, while rents across upstate New York are up about 2 percent. Rental vacancy rates have risen slightly across the District, though they remain fairly low, especially in New York City. Multi-family construction remained fairly robust throughout most of the District in the fourth quarter.\nCommercial real estate markets were mixed but, on balance, somewhat stronger in the fourth quarter. In New York City, office availability rates continue to drift down to new multi-year lows, while asking rents are running 6-8 percent higher than a year ago. Availability rates also edged down in northern New Jersey but edged up in Long Island and across upstate New York. Rents outside New York City are generally little changed from a year earlier. Office construction across the District continues to be sparse at best. Industrial markets, however, mostly improved in the fourth quarter, as industrial availability rates continued to trend down in Long Island and northern New Jersey, while asking rents rose moderately.\nOther Business Activity\nManufacturing contacts across the District generally report that conditions improved somewhat in late 2014. Moreover, a survey of New York City area purchasing managers points to an acceleration in business activity in December; and a trucking industry expert reports that business conditions have improved substantially in late 2014, reflecting both strong demand and falling diesel prices; truck drivers are in high demand.\nThe job market overall showed further signs of strengthening in December, though contacts noted that this is a difficult time of year to gauge the market. Still, one employment agency notes that hiring activity has remained unusually robust across a range of industry sectors during this typically slow month. Another employment agency reports more of a typical seasonal lull but notes that more job candidates seem to be receiving multiple offers. Both contacts note increasing upward pressure on wages. Various contacts mention particularly strong demand for workers in information technology, human resources, customer service and trucking.\nFinancial Developments\nBankers report increased demand for commercial mortgages, commercial and industrial loans but steady demand for consumer and residential mortgage loans. Bankers note a continued decrease in demand for refinancing. Banks report that credit standards were mostly unchanged though there were slight indications of tightening in consumer loans and commercial mortgages. Respondents report a slight decrease in spreads of loan rates over cost of funds--mainly on consumer, as well as commercial and industrial loans. Respondents indicate no change in the average deposit rate, on balance. Finally, bankers report continued decreases in delinquency rates on commercial mortgages and commercial and industrial loans, but an uptick in delinquencies for residential mortgages and some leveling off in rates on consumer loans.\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 3, 2014\nEconomic activity in the Twelfth District continued to improve moderately during the reporting period of early October through mid-November. Overall price and wage inflation remained modest. Retail sales and demand for business and consumer services increased moderately. Overall manufacturing activity picked up, while agricultural conditions were mixed. Real estate activity advanced, but growth in the residential sector varied across the District. Loan demand increased moderately.\nPrices and Wages\nOverall price inflation remained modest during the reporting period. Historically low iron ore prices and strong competition from China contributed to declines in finished steel prices. Grain prices remained very low. Natural gas prices declined during the reporting period. Health-care sector contacts reported that medical insurance premium increases for individual coverage for 2015 were very low by historical standards. Prices remained stable in the Internet and digital media sector. However, a maker of paper card games announced the first price increases in eight years. Prices of wallboard, wood, cement, and insulation increased or held at relatively high levels during the reporting period. Average daily hotel room rates in southern California increased to pre-recession levels.\nIn general, wages continued to increase at a modest pace during the reporting period. Several contacts reported that wages were flat or had increased at about the rate of price inflation in their area. Some employers are implementing wage increases in excess of price inflation for high-value, long-term employees whose wages have been flat in nominal terms for several years. Shortages of workers in skilled construction trades, computer programming, electronic game design, and bank loan origination boosted wages in those sectors. Some contacts in the hotel sector reported that recent minimum wage increases significantly affected overall compensation costs during the reporting period.\nRetail Trade and Services\nOverall retail sales grew moderately during the reporting period. Contacts cited lower gasoline prices and continued improvement in employment conditions in many geographic areas as spurs to growth. However, contacts reported that retail spending is soft in areas where the employment situation is still weak. Spending on durable goods and household items in the District grew faster than spending on apparel and groceries. Manufacturer incentives contributed to strong auto sales, especially of new vehicles. Many contacts expect this year's holiday retail sales to surpass last year's by 5 percent to 10 percent.\nDemand for business and consumer services grew moderately during the reporting period. Demand for cloud computing services continued to increase. Restaurant sales climbed, especially in the quick-service segment. Consumers shifted away from hamburgers, towards chicken, pizza, and Mexican food. Contacts expect that restaurant sales will increase further if gasoline prices continue to decline. Hotel occupancy rates in southern California have been increasing this fall, and October was a particularly strong month. However, holiday bookings by Western Europeans are down from last year.\nManufacturing\nOverall District manufacturing activity picked up during the reporting period. Year-to-date semiconductor revenue increased 8 percent from the same period last year, and contacts expect strong sales to continue into 2015. However, slower growth in Europe and Asia contributed to softer sales of semiconductors used in power devices and equipment. Orders for residential building materials increased modestly during the reporting period. Capacity utilization for plants producing steel products used in nonresidential construction increased to its highest level since 2008. However, the stronger dollar and slower growth in Asia contributed to a modest decline in demand for recycled metals. Biotechnology and pharmaceutical sector revenue increased during the reporting period, but contacts reported that some biotechnology companies have postponed initial public offerings of their stock until the economic outlook for Europe improves. Year-to-date commercial aircraft deliveries and orders increased moderately from the same period last year. Aerospace and defense sector capacity utilization decreased during the reporting period.\nAgriculture and Resource-Related Industries\nAgricultural conditions in the District were mixed during the reporting period. In general, the continuing drought in California depressed yields for crops such as raisins and almonds. However, tomato production and prices hit record highs. Washington saw very strong apple and pear harvests and an increase in agricultural exports. Idaho farmers reported an excellent potato harvest, but late-season rains damaged wheat and barley crops. Domestic and foreign demand for West Coast timber is healthy, and contacts reported that shortages of skilled loggers and logging trucks and equipment increased somewhat.\nReal Estate and Construction\nReal estate activity advanced during the reporting period, albeit less consistently across the District for residential properties than for commercial properties. Contacts from some urban areas reported that home prices continued to increase rapidly; in other urban areas, however, prices stalled. In rural areas of the District, home prices generally increased at a moderate pace. Some contacts reported that, despite active construction and ample inventories, new homes have been selling at notably higher prices than comparable existing homes. Commercial real estate construction activity was solid during the reporting period, and vacancy rates decreased in most areas.\nFinancial Institutions\nOverall loan demand increased moderately since the previous reporting period. Contacts cited stronger demand for auto loans, credit card loans, and small business refinance loans. Vigorous competition among lenders engendered very favorable loan terms for the highest-quality borrowers. Net interest margins remained narrow, and shrank further for some banks. Some contacts reported that, in their area as a whole, the profitability of community banks declined during the reporting period. In general, private financing activity and venture capital activity were strong.\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 3, 2014\nOn balance, the Fourth District's economy expanded at a modest pace during the past six weeks. Manufacturers reported that business activity increased at a modest rate. Demand for nonresidential construction strengthened, while the residential market was stable. Consumer spending at retail outlets grew slowly, and year-to-date auto sales posted moderate gains compared to 2013. District coal production is up slightly year-over-year, while shale gas activity remains at a high level. Freight shipments were strong, but capacity constraints are limiting growth. The demand for business credit moved higher, and consumer lending held steady.\nPayrolls showed a mild increase, primarily in manufacturing, construction, and freight transportation. Staffing firms reported that the number of job openings and placements has fallen, which they attribute in part to seasonal effects. Because of shortages of certain types of skilled workers, upward pressure on wages is being felt by general building contractors, subcontractors, and freight haulers. Overall, input and finished goods prices were stable. There were scattered reports of rising prices for some metal and agricultural products and building materials. Transportation costs rose.\nManufacturing\nDistrict factories reported that demand ranged from stable to showing modest growth since the previous report. Year-to-date results were generally better compared to those in 2013, with several contacts citing organic growth as a contributor. Our contacts are fairly optimistic and expect moderate to strong growth in 2015, though some expressed concern about the strengthening dollar and weakening foreign economies. On balance, steel shipments showed a modest improvement since the last report; total volume (tonnage) for 2014 is expected to be slightly higher compared to the previous year. Manufacturers and steel producers reported that the strongest demand came from the motor vehicle, nonresidential construction, and oil and gas industries. Year-to-date auto production through October at District assembly plants was more than 5 percent higher compared to the same period in 2013.\nMost of our contacts reported that capital spending in the current fiscal year is in line with budgeted amounts. Fiscal year 2015 budgets are expected to be higher, with monies being allocated mainly for new equipment and expansion of plant footprints. In general, input costs were stable during the past six weeks, though we heard reports about rising steel, coffee, and sugar prices and significantly higher costs associated with transportation. Finished goods prices held steady. Several contacts noted that it remains difficult to pass through any cost increases. Little change in labor conditions was reported: The pickup in new hiring that began in the middle of the year continued and finding skilled workers remains a challenge. Wage increases in 2015 are projected to range from 2 percent to 4 percent.\nReal Estate and Construction\nSales of new and existing single-family homes varied across geographic markets during the past six weeks. Several builders and real estate agents, who experienced slow sales during the summer, reported rising activity in September and October. In total, home sales showed a modest decline in the fourth quarter when compared to the third quarter. A couple of builders noted that they believe the decline is more than a seasonal effect. Reports on year-over-year home sales were mixed. Most builders expect that activity will stay at current levels, though they expressed concern about a potential rise in interest rates, continued strict lending standards, and rising development costs. Multifamily development remains strong. New-home contracts were mainly in the move-up price-point categories. First-time buyers still have difficulty qualifying for mortgages. A majority of builders reported raising prices on homes during the past couple of months in response to increased costs for labor and materials. The upward trend in selling prices of existing homes has flattened out, but the current average price remains higher than the average level for 2013 by a few percent.\nNonresidential builders reported continued strong pipeline activity, and most indicated that the level of activity has increased relative to a year ago. Vacancy rates in existing retail, office, and warehouse space are on the decline. For the most part, general contractors are satisfied with their backlogs going into 2015. Market demand is broad based, although demand from shale-gas producers and for industrial space (manufacturing and distribution) is strongest. There has also been a pickup in requests for commercial space. On the downside, we heard a few reports about private capital being readily available so construction could proceed, but owners are reluctant to move projects into the construction phase because of uncertainty about the economy. Government-sponsored building activity remains relatively weak in some parts of the District. Most builders remain optimistic, but they are concerned about the availability of skilled labor, tight margins, the viability of the subcontractor market, and their own capacity constraints.\nGeneral contractors are not overly concerned with rising prices for building materials, but they did note large price increases for concrete and drywall and smaller price increases for steel products. Transportation costs are rising, reflecting capacity constraints among trucking and rail carriers. A majority of general contractors reported that they expect to increase their payrolls in future months in response to rising demand and to expand capacity. Subcontractors are pushing through rate increases at a faster pace than general contractors had anticipated; these increases are needed to cover rising costs, including for labor and to widen margins. As a result, general contractors, who remain under pressure to keep their rates down, are facing additional margin compression.\nConsumer Spending\nSpending at many retail outlets rose slightly since the last report. Nevertheless, retailers observed that even though lower gasoline prices are helping to boost spending, consumers are more interested in buying motor vehicles and experiences, such as vacations, rather than merchandise. On balance, same store revenues were flat relative to a year ago. Cold weather apparel is in demand and restaurateurs reported rising sales, especially in their take-out business. The outlook for the holiday shopping season is for revenues to be slightly higher than last year. Vendor and shelf prices held steady. Restaurant operators noted that they are raising their prices for menu items that use animal products. Retailers are running more promotions than usual to entice consumers back into their stores. Capital budgets for the 2015 fiscal year will be maintained at current-year levels or reduced. Monies are being moved from brick and mortar to ecommerce. Excluding temporary seasonal hiring, retail payrolls were stable. Reports indicated higher labor costs due to minimum wage increases and more competition for hourly employees, which was attributed to the improving economy.\nNew motor vehicle sales increased from September to October. Unit volume year-to-date was more than 5 percent higher compared to the same time period in 2013. Strong sales of SUVs and trucks continued; this strength was attributed to lower gas prices and strength in the construction industry. Some dealer inventory is high at this time because recent recalls have prevented certain models from being sold to the public. Demand for service technicians is up because of the recalls. Dealers project unit volume for all of 2014 will be 5 percent to 10 percent higher than in 2013, with sales being highly dependent on dealer and manufacturer incentives and the availability of leasing. Used-car purchases showed a moderate increase since the last report, and used-car prices are starting to decline.\nBanking\nBankers reported that demand for business credit was showing modest to moderate growth during the past six weeks. While demand was described as broad based, it was strongest for commercial real estate development, multifamily housing, and mergers and acquisitions. We heard several reports of large regional and national banks establishing a presence in smaller markets traditionally served by community banks. On net, consumer credit demand was roughly stable. The number of applications for auto loans remains strong, while households are making marginally greater use of credit cards and home equity products. Though the pricing environment remains competitive, interest rates were mainly steady for business and consumer credit and for residential mortgages. Delinquency rates are improving across loan categories. No changes were made to loan-application standards since the last report. Deposits were described as strong and growing. Little change in payrolls is expected in the near term.\nEnergy\nYear-to-date coal production across the District is slightly above prior-year levels. Output is projected to increase in Pennsylvania and northern West Virginia with no material change expected in eastern Kentucky and Ohio. The downward trend in spot prices for thermal and metallurgical coal is showing signs of flattening out. Activity in the Marcellus and Utica shale formations remains at a high level. We heard several reports indicating that although there is some financial belt-tightening by exploration and production companies, drilling programs should continue in most regions even though medium-term projections for oil and gas prices are at low levels. One industry executive reported that some investment will shift away from Pennsylvania to Ohio and West Virginia because the latter two states are rich in wet gas, which commands a price premium. On balance, energy-related equipment and materials prices were unchanged since the last report. Energy payrolls held steady.\nFreight Transportation\nFreight volume was little changed since the last report. Although shipments remain strong, capacity constraints are limiting the industry's growth. Demand is strongest from the agriculture, industrial machinery, and oil and gas industries. Little change in equipment pricing was noted. Due to lower diesel fuel prices and favorable pricing, carriers' bottom lines are either stable or improving. Our contacts' outlooks are positive, though any expected increase in activity through year's end is being attributed to typical seasonal swings. Capital spending in 2015 is projected to be on a par with the current year. Monies are being allocated to replace aging equipment (including auxiliary power units) and adding capacity, but the rate of increase is slow. Hiring is both for replacement and for adding capacity. Industry executives identified three sources of rising labor costs: wages (reflecting a driver shortage), healthcare (related to compliance with the Affordable Care Act), and regulatory compliance (related to hours-of-service rules).\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 3, 2014\nThe Fifth District economy strengthened moderately since the previous report. Manufacturing activity increased at a slightly slower pace, as shipments and new orders grew modestly. Inventories of finished goods and raw materials rose more quickly in recent weeks. Retail sales rose moderately faster. Revenues at non-retail services firms also grew more rapidly. District tourism advanced on pace with the prior report. Residential mortgage demand increased in several locations as housing markets improved modestly. Commercial leasing varied by location; increases in retail rental rates were widespread. In agriculture, several farmers reported completion of crop harvests. Crop prices were lower than a year ago, but prices for poultry, cattle, and swine were higher. Coal production was unchanged since our previous report. Natural gas production increased moderately. Hiring was generally steady--and in some cases a little stronger--across the District. Average wages rose more quickly on net in the manufacturing and services sectors in recent weeks. Growth slowed in manufacturing prices paid and prices received. Service sector price growth remained constant.\nManufacturing\nManufacturing activity increased at a slightly slower pace in recent weeks. Shipments and new orders grew modestly, and expectations for the months ahead remained positive. Inventories of finished goods and raw materials rose at a faster pace compared to the previous report. A South Carolina packaging materials manufacturer reported a great month, with increased new orders and shipments. He also said that he had expanded his facility. A machinery manufacturer in North Carolina stated that business improved, with more new customers. An engineered plastics producer in North Carolina reported steady demand and new purchases of equipment. In contrast, an auto parts manufacturer in South Carolina said that demand growth varied across business segments. A Virginia components producer reported no change in new orders and shipments, although the company has increased capital expenditures in anticipation of improved business prospects. A North Carolina dental products manufacturer said new orders slowed recently and demand was below a year ago. Prices of raw materials and finished goods rose at a slightly slower pace since the preceding report.\nPorts\nPort activity increased in recent weeks, especially on the import side. Container traffic remained very strong. Exports of empty containers rose, a signal of the peak season, since the containers will be filled and returned. Exports of filled containers also increased robustly, primarily those loaded with grain, soybeans, animal feed products, and waste paper. Coal exports declined since the previous report. Imported container counts exceeded exports, led by increases in consumer products such as appliances, holiday d\u00c3\u00a9cor, and apparel. Imports of construction machinery, machine and auto parts, and agricultural products also rose. Delays in rail transportation of goods to ports remained an issue.\nRetail\nRetail sales rose moderately faster since our previous report, with slightly stronger big-ticket sales. An executive at a large chain department store reported a modest decline in same-store sales coupled with double-digit growth in online sales. He stated that his company's recent capital expenditures have been devoted to improving its internet site and credit card security. A car dealer in the Baltimore region said new car sales were strong in October, and trade-ins increased his stock of used and rental cars. He also stated that manufacturers have sent out recall notices and replacement parts are ready, but that many consumers are not bringing their recalled cars in for repair. An executive at another large auto dealership reported a high number of recall fixes along with increased used car sales. A hardware chain executive said he has built up inventory in anticipation of another harsh winter. Grocery managers reported faster price growth; other retail prices continued to rise moderately.\nServices\nNon-retail services firms' revenues rose more quickly in recent weeks. Several trucking contacts reported faster revenue growth; one said that rail delays have resulted in some additional cargo being moved by trucks. An executive at another large trucking firm stated that current strength at his business is being driven by seasonal demand. At other services firms, a finance executive reported that his clients were feeling more comfortable with asset market investments, and a partner at a CPA firm reported some new business. Service-sector prices continued to rise modestly since our previous report.\nTourism and business travel remained on pace with our prior report, with particular strength in the Charlotte and Research Triangle regions of North Carolina and North Charleston, South Carolina. A source on the North Carolina outer banks reported that Thanksgiving week bookings are solid, and a Charleston, South Carolina restaurant executive said the local hospitality industry is thriving. Occupancy and room rates continued to rise in the Carolinas. A western Virginia ski resort manager reported that the recent sharp temperature drop allowed early snow-making, bringing a spike in bookings. He added that group bookings had nearly filled rooms for the Christmas season.\nFinance\nLending conditions have improved somewhat since our previous report. Residential mortgage demand increased in Maryland, central South Carolina, and West Virginia, but was was little changed in Virginia and southeastern South Carolina. In North Carolina, reports varied: One lender said mortgage lending declined but another said loan demand was strong, especially for new construction. In Maryland and West Virginia, contacts reported that increased competition had led to aggressive mortgage terms and lower loan yields for banks. Deposits increased in North Carolina and Virginia. In addition, auto and consumer credit borrowing rose in North Carolina. A South Carolina contact said first-time homebuyers were finding it difficult to get financing as a result of the qualified mortgage rule. No changes to credit standards or credit quality were reported. Business lending rose in North Carolina, particularly for commercial real estate and business mergers and acquisitions. Commercial real estate lending also rose in Maryland and South Carolina. Mortgage interest rates declined slightly according to bankers in Virginia and West Virginia and were unchanged elsewhere in the District.\nReal Estate\nDistrict housing market activity increased modestly on balance since the previous report. Realtors continued to report steady levels of buyer traffic with slight increases in sale prices. Most brokers reported low levels of housing inventories, although contacts in Northern Virginia and the District of Columbia had slight increases. Average days on the market decreased in central Virginia and in the District of Columbia, but increased slightly in the Carolinas and Northern Virginia. A Northern Virginia Realtor reported greater movement in the $200,000 to $900,000 price range, but had fewer buyers for homes priced above $1 million, and said condo sales were stagnant. A contact in South Carolina reported tepid condo sales and steady demand for single-family homes priced below $250,000. Realtors reported no change in new home construction. Multifamily leasing was strong in Charlotte and Baltimore.\nCommercial real estate activity increased moderately in recent weeks. Brokers reported that commercial sale prices increased slightly, and that sales activity was strong in Richmond, Baltimore, and Charlotte. Multiple Virginia contacts reported an increase in retail construction. Brokers in Baltimore and Richmond said medical construction increased recently. A contact in Columbia, South Carolina reported a strong market for leasing of manufacturing plants and storage and distribution warehouses. A Realtor in Charleston, West Virginia said available Class A and Class B office space had increased in an already sluggish office market. In contrast, a Richmond broker described less availability of Class A office space. There were several reports of rising retail rental rates; growth in other rental rates varied by region and submarket.\nAgriculture and Natural Resources\nDistrict agribusiness conditions were reported as stable. A grower in South Carolina completed peanut harvesting, and one in West Virginia finished wheat and cover crop harvesting. Dry weather in eastern Virginia delayed tree harvests. A North Carolina contact reported higher year-over-year orders for Christmas trees from big-box stores. Soybean harvesting was half-completed in South Carolina and in West Virginia, where yields were above average. Demand for wood pellets increased. Farmers reported lower crop prices and higher poultry, cattle, and swine prices than a year ago. Input prices rose since the previous report. Some growers planned fewer equipment purchases relative to a year ago.\nCoal production remained at the same levels as in our preceding report and prices were unchanged. Natural gas production increased moderately in recent weeks, and prices decreased slightly.\nLabor Markets\nDemand for workers picked up in the Carolinas but was little changed in Maryland and Virginia since the previous report. A staffing agency in North Carolina reported increased hiring of permanent workers across a broad base of industries. A South Carolina staffing agent reported increased direct hiring across a diverse set of industries, including engineering, manufacturing, financial services, and environmental sciences. In the Carolinas, temp hiring increased, and more clients converted temporary positions to permanent, reducing the pool of talented temporary workers. Contacts reported difficulty finding IT professionals, managers, and engineers, as well as manufacturing, transportation, and warehouse workers. Wages were stable except for a few occupations, such as computer programmers and truckers. However, a recruiting agency director in North Carolina said some sign-on bonuses and relocation assistance packages were being offered more frequently. According to our most recent surveys, manufacturing employment grew at a slightly slower rate while average wage growth increased marginally relative to the previous survey period; in the service sector, employment grew more rapidly and wages increased at a faster pace.\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 3, 2014\nOverall, the Ninth District economy grew moderately since the last report. Increased activity was noted in consumer spending, tourism, commercial construction and real estate, residential real estate, professional services, manufacturing, mining, and agriculture. Activity was steady in energy and mixed in residential construction. Hiring continued to outpace layoff announcements. Although overall wage increases were moderate, some signs of increased wage pressures were noted. Price increases were generally subdued.\nConsumer Spending and Tourism\nConsumer spending increased modestly, and retailers were cautiously optimistic for the holiday shopping season. Respondents to a survey of holiday shoppers in the Minneapolis-St. Paul area that was conducted by the University of St. Thomas indicated that per-household spending will increase by about 4 percent relative to last year. Recent same-store sales at two large retailers were up slightly compared with a year ago. A food retailer in Minnesota reported that recent same-store sales were level from a year ago, while a restaurant chain in Minnesota noted that recent sales were down from last year.\nWhile fall tourism activity was level with a year ago, early snowfall in several areas of the District has led to increased optimism for the winter season. Some downhill and cross-country ski locations in Minnesota and northwestern Wisconsin opened about two to three weeks earlier than usual. Likewise, in the Upper Peninsula of Michigan, heavy snowfall has helped boost lodging reservations for the winter season according to an official.\nConstruction and Real Estate\nCommercial construction activity increased from a year ago and is expected to grow further in 2015. According to preliminary results from the Minneapolis Fed's 2015 business outlook poll, construction-sector respondents are optimistic for the coming year and expect sales volumes and capital investment to increase at their firms. \"New construction activity is having a huge impact,\" commented a Minnesota commercial construction supply firm. In Sioux Falls, S.D., the value of October commercial permits almost doubled from a year ago. But, in Billings, Mont., commercial permits were down in value in October from a year earlier. Residential construction activity was mixed compared with last year. In the Minneapolis-St. Paul area, the value of October residential permits decreased 9 percent compared with October 2013. However, the value of October residential permits in Sioux Falls increased 61 percent from the same period last year. October residential building permits in Billings increased significantly in value from last year for both single-family and multifamily buildings.\nActivity in commercial real estate markets increased since the previous report. A real estate analytics firm noted strength in several market segments. For example, in the Minneapolis-St. Paul area, the industrial vacancy rate dropped by 30 basis points in the third quarter from the same period last year, the office vacancy rate dropped 90 basis points, and the retail vacancy rate was flat. Residential real estate market activity also increased since the previous report. In the Sioux Falls area, October home sales were up 5 percent, inventory increased 4 percent, and the median sales price increased 8 percent relative to a year earlier. October home sales in western Wisconsin were up 20 percent from last year; the median sales price was up 3 percent. Home sales were up in Montana in the third quarter compared with last year. Minnesota home sales were up 4 percent from the same period a year ago in October, the inventory of homes for sale increased 8 percent, and the median sales price rose 2 percent. However, multifamily housing vacancy rates increased slightly from the second quarter to the third quarter in the Minneapolis-St. Paul area.\nServices\nActivity at professional business services firms increased at a modest pace since the previous report; growth is expected to continue in 2015. Service-sector respondents to the business outlook poll expect sales volumes and capital investment at their firms to grow in 2015; more than four out of five were optimistic regarding their community's future economic performance. A contact at a mid-size environmental engineering firm noted 5 percent to 7 percent growth in revenue since the previous report.\nManufacturing\nThe manufacturing sector grew at a healthy pace since the previous report. According to preliminary results from the Minneapolis Fed's 2015 survey of manufacturers, more than half of respondents indicated that demand and production had increased from a year earlier; on average, respondents expect orders, production, employment, investment, and profits at their operations to increase in the coming year. A manufacturing index for Minnesota and the Dakotas released by Creighton University (Omaha, Neb.) decreased in October from the previous month, but remained at levels consistent with an expansion in activity in all three states. A partnership among several firms announced plans for a $4 billion petrochemical facility in North Dakota that would be the largest private investment in the state's history.\nEnergy and Mining\nActivity in the energy sector was steady, but mining activity rose since the previous report. In early November, oil and gas exploration activity decreased in North Dakota and increased in Montana relative to a month earlier; production remained at record levels. Despite recent declines in oil prices, officials in North Dakota expect oil production to continue increasing over the next two years. October production at District iron ore mines increased from a year earlier. In response to rail delays, District mines are sending more ore by truck to water ports.\nAgriculture\nOverall agricultural conditions improved from the previous report. Early estimates of crop production indicated record soybean harvests and a very large corn crop in District states. However, farm incomes continued to be affected by lower crop prices; in contrast, livestock and dairy producers benefited from lower feed costs and high output prices. Relative to a year earlier, prices received by farmers in October were lower for corn, soybeans, wheat, and hay; prices were higher for cattle, hogs, poultry, and milk.\nEmployment, Wages, and Prices\nHiring continued to outpace layoff announcements. A medical technology company recently announced plans to hire almost 500 workers at facilities in western Wisconsin. A firm that supplies aerospace companies plans to expand operations in Minnesota, adding 30 to 50 new jobs. Business owners in western South Dakota noted difficulty finding qualified workers for open positions. Agricultural producers in eastern North Dakota recently reported difficulty finding enough truck drivers to move commodities. Nursing positions were difficult to fill in parts of Minnesota. In contrast, a vegetable canning plant in Minnesota recently announced that it will close, affecting 46 full-time workers and about 150 seasonal workers.\nAlthough overall wage increases were moderate, some signs of increased wage pressures were noted. According to preliminary results from the survey of manufacturers, respondents noted that wage increases averaged slightly less than 3 percent compared with a year ago. In Minnesota, a contact reported that wages for skilled construction trades have increased as much as 10 percent from a year ago, and a temporary staffing firm's representative noted that businesses were paying increased wages for some occupations. According to preliminary results from the business outlook poll, 16 percent of respondents expect wages and salaries in their communities to increase by 4 percent or more during 2015, up from 7 percent in last year's poll.\nPrice increases were generally subdued. According to the business outlook poll, 37 percent of respondents expect prices for their firms' products and services to increase in 2015, while 20 percent expect decreases. In last year's poll, 33 percent expected increases and 15 percent expected decreases. Minnesota gasoline prices were down more than 20 cents per gallon from mid-October and from a year ago.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Dallas

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"Beige Book Report: Dallas\nDecember 3, 2014\nThe Eleventh District economy expanded at a solid pace over the past six weeks. Manufacturing activity continued to increase overall, although there were a few reports of slowing growth in demand. Retail and automobile sales reports were mixed, and nonfinancial services firms saw steady or improved demand. Sales of single-family homes slowed, but apartment, office, and industrial leasing activity remained strong. Demand for oilfield services stayed robust; agricultural conditions generally improved. Selling prices were stable or rose slightly for most firms, and employment held steady or increased. Outlooks remained optimistic, but some contacts noted concerns about the potential effect of declining oil prices on the District economy.\nPrices\nMost responding firms said prices increased slightly or held steady since the previous report, with a slight uptick in the share of firms raising prices. Accounting, legal, and staffing firms said rates were unchanged over the reporting period. Some staffing firms, however, mentioned plans to increase fees early next year to cover higher costs resulting from the Affordable Care Act. Retailers and auto dealers also noted steady prices, while airlines reported higher fees and fares. Manufacturers of primary metals said they were finding it difficult to raise prices. Prices of construction materials such as cement, brick, and fabricated metals rose, while prices for transportation equipment and high-tech products held steady. Food producers continued to note selling price increases that reflected rising input costs, but added that they will likely not be able pass on cost increases in the future. Most transportation service firms, including airlines, reported lower fuel costs.\nThe price of West Texas intermediate crude oil fell sharply over the reporting period, resulting in a notable decline in gasoline and diesel prices. The price of natural gas dropped slightly as well, reflecting rapid growth in inventories.\nLabor Market\nEmployment at most firms held steady or increased since the previous report, and contacts continued to note difficulty in finding skilled workers, particularly in areas where the energy sector was booming. Reports of hiring came from accounting, legal, and staffing services firms and from food product, cement, fabricated metal, petrochemical, and transportation equipment manufacturers. Retailers also noted holiday-related hiring. Residential construction contacts continued to report labor shortages, and energy contacts saw no relief from the tight labor market, especially in West Texas. Financial firms reported greater difficulty in finding workers than in the past, and one law firm said they were increasingly losing mid-level lawyers to in-house counsel job offers from other companies.\nUpward wage pressures continued to be widespread, particularly for skilled labor. Upward wage pressures were reported for truck drivers, auto technicians, engineers, and for technically skilled workers in construction and food manufacturing. One primary metals manufacturing firm gave a five percent raise to all of its employees, and some construction-materials manufacturers noted an uptick in wage pressures. High-tech manufacturers said overall wage pressures eased since the previous report, though several contacts continued to note upward pressure for employees with certain technical skills.\nManufacturing\nReports from manufacturers were mostly positive, with only a few noting slowing growth in demand. Cement producers noted improved demand, with one contact saying that demand resulting from industrial and commercial building activity was particularly robust. Lumber and brick manufacturers said sales grew at a slower pace since the last report. Fabricated metals manufacturers saw a broad-based increase in demand that resulted from strength in both energy-related work and in highway, commercial, and industrial construction. Reports from primary metals producers were mixed, with most contacts noting slightly higher sales but with one respondent reporting notably weaker demand.\nHigh-tech and transportation equipment manufacturers noted stable demand over the last six weeks, and outlooks were positive. Food producers said demand was unchanged, ignoring seasonal effects, over the reporting period, and noted increased optimism in their outlooks. Gulf Coast chemical producers reported higher production rates, with the end of several planned and unplanned plant outages. Domestic sales of PVC and polyethylene were strong, while export demand for these products declined. Refinery utilization rates along the Gulf Coast, while still high, decreased slightly in October. Refiners' margins remained healthy, and outlooks among refiners and chemical producers were positive.\nRetail Sales\nRetail demand growth fluctuated over the last six weeks. Sales were sluggish during the earlier part of the reporting period, but the unusually cold weather led to a strong acceleration in demand toward the end of the reporting period. Strength was noted in home, jewelry, cosmetics, and winter-weather related merchandise. Three national retailers said demand in Texas continued to outperform the national average. Outlooks for the remainder of the year were positive, and contacts expect low single-digit increases in sales next year.\nAutomobile sales reports were mixed. One contact noted an all-time record sales month in October; however, others noted slightly softer demand recently. Year-over-year demand was up. Outlooks were optimistic, with contacts expecting sales growth in 2015 to be as strong as in 2014.\nNonfinancial Services\nDemand for staffing services was flat to higher since the previous report. Houston and Dallas\u00e2\u20ac\u201cFort Worth continued to be the strongest markets, and most contacts said that workers at all skill levels were in high demand. One contact reported that while direct hiring was stronger, orders for temporary and contract workers were growing as well. Demand for accounting services fell, reflecting a normal seasonal downturn, but contacts noted that insurance firms were continuing to provide a healthy pipeline of work. Legal firms noted a slight increase in activity over the last six weeks. Work related to mergers and acquisitions picked up, while demand for legal services from oil and gas companies slowed in response to increased uncertainty regarding future oil prices. Litigation activity remained sluggish, but real estate and intellectual property work continued to be strong.\nTransportation service firms said changes in overall cargo volumes were mixed, but outlooks continued to be positive. Trucking firms reported strong demand, but said that cargo volumes were even with last year's levels. Shipping cargo volumes increased, boosted by notable growth in steel tonnage. Air cargo volumes fell but were up sharply from year-ago levels. Airlines said passenger demand held steady since the previous report. Domestic demand remained strong and outlooks were positive.\nConstruction and Real Estate\nThe District's housing sector softened slightly during the reporting period. Slower growth in home sales was partly attributable to seasonal demand changes, although some of the weakening was attributed to higher home prices as well. Two contacts said that builders were not purchasing lots as readily as they have in the past. Outlooks were mostly optimistic, but a few contacts noted concerns about price affordability and the potential impact of an increase in mortgage rates on housing demand. Apartment demand remained strong, keeping occupancy rates high and rent growth solid in most major Texas metropolitan areas. Outlooks were generally positive, but contacts expect rent growth to slow in the near term.\nOffice and industrial leasing activity was mostly unchanged from the previous report. Investor interest in commercial properties, including foreign capital investment, stayed solid. Outlooks were generally optimistic, although there was some concern about the potential effect of declining oil prices.\nFinancial Services\nOverall loan demand expanded slightly during the last six weeks. Real estate lending increased, with strength noted in demand for construction loans for single-family and multifamily building activity. Consumer lending rose slightly, particularly for auto loans, while financing for medium-sized businesses held steady. Respondents noted increased optimism as year-end figures pointed to solid growth in 2014, although some contacts whose clients are in oil and gas production said they expect a possible slowdown in business because of declining oil prices.\nEnergy\nDemand for oilfield services continued to grow in the Eleventh District. Growth in Texas drilling activity was concentrated in the Permian Basin in West Texas; drilling activity outside of the Permian Basin was little changed. Outlooks for next year, though still positive, were less optimistic than in the prior report, and contacts said that budgets were being revised and capital expenditures are expected to decline in response to lower oil prices.\nAgriculture\nRecent rainfall improved soil moisture, although drought conditions remained severe in some northern parts of Texas. Harvesting wrapped up for most spring crops. Yields were generally strong and well above 10-year averages. Improved conditions for cotton allowed for more acres to be harvested this year than in the recent past, although the rains during harvest time have had an adverse effect on cotton quality. Dairy producers have had a tremendous year with good margins, but milk and dairy prices have fallen lately, reflecting shrinking exports and increased world production.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Kansas City

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"Beige Book Report: Kansas City\nDecember 3, 2014\nThe Tenth District economy grew slightly in October and November, and most contacts expected modest growth over the coming months. Consumer spending increased modestly with retail contacts reporting moderate growth and auto, restaurant, and tourism contacts reporting a slight decline. Manufacturing production rose slightly, and overall manufacturing activity was anticipated to strengthen further over the next few months. District commercial real estate activity increased moderately, while residential real estate activity declined slightly. Looking ahead, real estate construction was expected to increase modestly. Contacts in the banking industry reported steady loan demand and loan quality and slightly higher deposit levels. Despite strong profit in the livestock sector, total farm income was below year-ago levels and was expected to fall further due to low crop prices. Energy-sector activity remained steady, and respondents were cautiously optimistic about future drilling activity. Prices grew modestly alongside a slight rise in wages and an increasingly tight labor market.\nConsumer Spending\nConsumer spending increased at a modest pace since the previous survey, and most contacts expected faster growth in the months ahead. Retail sales grew moderately and were well above year-ago levels. Several retailers noted stronger sales of apparel and winter-weather products, though sales for some higher-priced items were again characterized as weak. Expectations for future sales remained solid, and inventory levels were expected to rise somewhat over the next few months. District auto sales declined in October and November. However, dealer contacts anticipated some increase in sales in the months ahead and noted solid sales for small SUVs and pickup trucks. Auto inventories rose but were expected to move lower in the coming months. Restaurant sales continued to decline but were slightly above year-ago levels. Restaurant contacts expected this weak activity to persist heading into the winter months, and several contacts continued to comment on the rising cost of labor. District tourism activity fell further but was flat compared to the previous year. However, tourism activity was expected to improve modestly in coming months.\nManufacturing and Other Business Activity\nDistrict manufacturing and other business activity rose modestly in October and November. Total manufacturing production expanded slightly, with production of aircraft parts and equipment posting particularly strong gains. However, activity at food, plastics, and chemical plants continued to decline. Contacts reported solid gains in factory shipments and order backlogs, and expectations for future factory activity strengthened further. However, firms reported rising difficulties in attracting and retaining certain key workers, with several contacts noting increased labor costs. Manufacturers' capital spending plans remained positive and above year-ago levels, but the pace of expected growth moderated slightly. Transportation and wholesale trade firms reported moderate sales growth since the previous survey period, and activity remained considerably higher than a year ago with firms generally optimistic about future months. Professional and high-tech firms noted a drop in sales since the previous survey period, although sales were up solidly compared to last year, and contacts anticipated strong activity in coming months. One large high-tech firm said the government had shifted toward small businesses for local defense contracts, which had negatively affected their business.\nReal Estate and Construction\nDistrict real estate activity edged up in October and November, as a slight decline in residential real estate activity was offset by moderate growth in commercial real estate activity. Residential home sales decreased slightly, reflecting typical seasonal sales patterns, with sales of low- and medium-priced homes continuing to outpace sales of higher-priced homes. Home prices increased modestly, and inventories decreased slightly since the previous survey period. Expectations for residential real estate sales and prices were slightly positive, but inventories were expected to continue to decline modestly. Housing starts increased at a modest pace, and construction supply sales were flat. Residential construction activity was expected to increase modestly as contacts anticipated higher sales, starts, and traffic of potential buyers. Commercial real estate activity continued to increase at a moderate pace with lower vacancy rates and stronger sales, prices, and construction activity. The commercial real estate market was expected to continue to expand moderately over the next few months.\nBanking\nBankers reported steady overall loan demand, stable loan quality, and slightly higher deposit levels compared to the previous survey period. Respondents indicated a decrease in the demand for agricultural loans. However, most contacts noted steady demand for consumer installment loans and commercial and industrial loans. Demand for both commercial and residential real estate loans was mixed compared to the last survey. Most bankers indicated loan quality was unchanged compared to a year ago, and a majority expected loan quality to remain the same over the next six months. Credit standards remained largely unchanged in all major loan categories. In addition, a larger number of bankers reported increasing deposit levels than in the previous survey.\nAgriculture\nFarm income expectations fell sharply since the last survey period as above-average corn and soybean yields were not expected to fully offset low crop prices. District contacts reported current levels of farm income that were significantly lower than last year despite some support from crop insurance and strong profits in the livestock sector. Although reduced income for crop producers had contributed to a rise in the need for short-term loans to the farm sector, agricultural bankers reported that sufficient funds were available for qualified borrowers. Following several years of very strong growth, District cropland values declined slightly in recent months and were holding just above year-ago levels. However, improved profitability in the livestock sector and the potential for herd rebuilding had supported demand for high-quality pasture and contributed to moderate gains in ranchland values.\nEnergy\nDespite the current downward trend in oil prices, District energy-sector activity remained steady in October and November. Most contacts continued to report a high level of drilling activity, and active oil and gas rigs rose through early November, particularly for natural gas. Respondents remained optimistic about future drilling but were closely monitoring the price of oil, which was close to many firms' breakeven price. Oil prices were at a four-year low due to signs of an oversupplied global market and were expected to weaken marginally in coming weeks. Natural gas prices edged up in line with seasonal norms and colder weather and were anticipated to rise slightly as demand increases through the winter. Total revenues in the energy sector were expected to decline somewhat as a result of lower oil prices.\nWages and Prices\nPrices in most industries grew modestly in October and November, and wage growth increased slightly, with many contacts reporting labor shortages. Retail prices edged up, and restaurant menu prices maintained their modest rate of growth. Manufacturers' raw materials prices increased, although at a slightly slower pace than in the previous survey, and finished goods prices rose modestly. Transportation input prices continued their moderate decline, but selling prices in the sector remained unchanged. Construction materials prices held steady relative to the previous reporting period, but most contacts expected slight growth moving forward. Wages in the retail sector increased in preparation for the holiday season, and retailers anticipated further increases in coming months. Wages grew slightly in the transportation sector, and manufacturers reported modest wage gains as they continued to highlight difficulties finding skilled labor. Respondents noted labor shortages for machinists, skilled construction trade workers, engineers, IT developers, and truck drivers.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

Philadelphia

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"Beige Book Report: Philadelphia\nDecember 3, 2014\nAggregate business activity in the Third District continued to grow at a modest pace during this current Beige Book period, with several notable shifts in the growth rates of specific sectors. Manufacturers reported moderate growth (a faster pace than the modest rate of the previous period). Staffing firms reported a moderate pace of growth, as did service-sector firms generally. Nonauto retailers reported modest growth (stronger than last period), auto dealers reported moderate growth (slower than last period), and tourism activity continued at a modest pace. Residential builders reported a slight decline in contract sales of new homes, while brokers noted a slight increase in existing home sales (sales of new homes had risen slightly during the past period, and existing home sales had been flat). The commercial real estate sectors reported modest growth for construction and for leasing of existing commercial properties, which was somewhat faster than in the prior period.\nLending volumes grew at a modest pace (a slight acceleration from the prior period), and credit quality continued to improve, while contacts continued to describe heated price competition for loans. Overall, contacts reported slight increases in wages, home prices, and general price levels that were similar to those reported for the previous Beige Book period. Contacts continued to anticipate moderate growth of economic activity over the next six months.\nManufacturing\nThird District manufacturers reported that activity has continued to grow since the previous Beige Book and that the pace has increased to a moderate rate. Similarly, firms reported strengthening of new orders and shipments, with a greater percentage of firms reporting increases and a smaller percentage of firms reporting decreases. Gains in activity continued to reflect relatively broad-based demand. Ongoing strength was mentioned by intermediate producers serving the automotive and commercial aviation sectors. Increased demand was reported to be coming from government expenditures on public infrastructure, especially bridges, and military spending. A chemical firm reported growing demand for products used for medical diagnostics but flat demand for lab chemicals.\nFor the third consecutive Beige Book period, well over half of Third District manufacturing contacts expressed expectations of positive future growth during the next six months; less than 10 percent expected activity to decline. Firms also continued to report that they expect to increase employment levels and capital spending.\nRetail\nThird District contacts reported modest growth in nonauto retail sales since the prior Beige Book period, a somewhat faster pace than before. As with fall apparel, a recent cold snap is now helping to move winter product lines, although retailers continued promotions in order to capture market share. An operator of area malls reported that traffic has improved relative to last year, with shoppers spending a higher average amount, and that department stores seem to be doing better. An operator of outlet malls cited favorable weather and low gas prices as factors driving its strong October and November sales. Overall, contacts were optimistic that they would see a slight improvement in sales in the upcoming holiday season compared with last year. Retailers reported holding more promotions prior to Thanksgiving and planning more promotions for after Christmas to compensate for this year's shorter shopping period between Thanksgiving and Christmas. Pennsylvania analysts are anticipating that this may be the first year in which a majority of households eat their turkey and pumpkin pie at restaurants rather than at home.\nAuto dealers reported moderate growth in sales year over year. A Pennsylvania contact described sales levels throughout the state as steady from August through October after reaching a record high in July. Statewide sales in New Jersey are nearing their pre-recession peak of a half million vehicles per year. Falling gas prices have shifted sales away from cars and toward light trucks and SUVs. Early reports of November sales were described as \"very good\" in New Jersey and in Pennsylvania. Dealers continued to express optimism for ongoing sales growth into 2015.\nFinance\nThird District financial firms reported modest increases in total loan volume, a somewhat faster pace than that reported in the previous Beige Book. Volumes increased most for commercial and industrial loans and for some consumer credit lines, including home equity but excluding credit cards. Contacts reported little change in volumes of home mortgages and commercial real estate. Contacts reported ongoing credit quality improvements and intense price competition for creditworthy loan prospects. Contacts described seeing and sensing continued strengthening of the economy. One bank contact reported that his bank's personnel and many of its customers had feelings about the economy that were \"close to optimism.\" Many firms have rebuilt strong balance sheets, accelerated maintenance schedules, and increased their productivity, yet lack sufficient confidence to take on the added risk of expanding capacity, according to this contact.\nReal Estate and Construction\nThird District homebuilders have reported lower traffic and declining numbers of contract signings since the previous Beige Book period. Builders report that first-time homebuyers remain scarce and that contracts for new homes with existing homeowners are often burdened by contingencies to sell their current home. Builders are entering a seasonally slow period that will likely extend over the remainder of the year; contacts reported starting some additional homes on spec to maintain sufficient activity for their construction crews. Although existing home sales tend to decline at this time of year, residential real estate brokers observed that sales were greater than expected. On a year-over-year basis, closings and pending sales are turning positive again in most major markets. Brokers continued to note some difficulties with buyers securing financing and with contingent contracts as buyers struggle to sell their own homes. Brokers do not expect overall sales in 2014 to surpass 2013 levels, but remain optimistic for a return to growth in 2015.\nConstruction and leasing reported by nonresidential real estate contacts have picked up to a modest pace of growth since the previous Beige Book period. Demand continues for new industrial/warehouse projects along the I-81/I-78 corridors. Recently, several major projects have broken ground in Center City Philadelphia; contracts have been signed and skilled tradespeople have been hired. An architecture and engineering firm reported ending its best year in the firm's history and that it expects to do more hiring in 2015. Contacts continued to report incremental improvements in leasing activity in downtown and suburban Philadelphia, especially for office, residential, and retail spaces in Center City Philadelphia.\nServices\nThird District service-sector firms have continued to report moderate growth in activity since the previous Beige Book. About half of all firms reported increases in new orders and sales. A large service contractor reported that new business opportunities were expanding, especially in the private sector. However, competition also remains strong with some projects lost to lower bidders. Staffing contacts in eastern and central Pennsylvania continued to report moderate increases in hiring for both temporary and permanent positions. Staffing requests have been broad-based and reflect business expansions as well as replacement hiring. Staffing firms remained upbeat about prospects for the remainder of this year. Overall, about three-fourths of all service-sector contacts reported expectations that growth trends will remain positive over the next six months; only a few anticipated declines.\nMost Third District tourist areas continued to benefit from great weather conditions throughout the fall. Contacts reported modest revenue gains overall, especially for hotels and restaurants. Visitors were still spending too little to make shore retailers happy. Early estimates by tourism contacts suggested that the remaining Atlantic City casinos may have absorbed about half of the revenues from three closed casinos and a much smaller percentage of employees. Most of the effects of the layoffs were felt within the immediate Atlantic County area. However, contacts throughout southern New Jersey anticipated some small effect from the reduced purchasing power of these laid-off workers.\nPrices and Wages\nOverall, Third District contacts reported little change to the steady, slight pace of price level increases that was seen in other recent Beige Book periods. About one-fifth of manufacturing contacts and one-fourth to one-third of service-sector contacts reported an increase in prices paid and received. Nearly three-fourths of manufacturing contacts reported no change in these prices, as did over one-half of nonmanufacturing contacts. Contacts from staffing and other firms noted little significant change to the slight wage pressures evident during the previous period. Brokers continued to report slight overall increases in home prices. The potential for falling gasoline prices to loosen consumers' pocketbooks sparked comments from retailers, brokers, and tourism contacts. Otherwise, few contacts reported material changes in wages or prices.\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 3, 2014\nEconomic growth in the Eighth District has slowed slightly from the pace reported in the previous Beige Book. Retail contacts have mostly seen slow to modestly increasing sales. However, recent reports of planned activity in manufacturing and services have been largely positive. Overall, residential real estate markets have remained weak, while commercial and industrial market conditions have been mixed. Lending at a sample of District banks has increased modestly. Finally, wages have increased at a modest pace, while consumer prices and employment levels have grown more slowly.\nConsumer Spending\nAnecdotal reports from retailers indicated slow to modestly increasing consumer spending on net. Half of the retailers surveyed anticipate fourth-quarter sales to be similar to a year ago; the remainder of contacts were evenly split between anticipating lower and higher sales. About 40 percent of respondents anticipate that, if current conditions persist, sales will fall short of expectations; only 10 percent of retailers report that sales are on pace to exceed expectations. The majority of retail contacts anticipate that holiday sales will be on a par with last year's sales, and only about a quarter of respondents anticipate some growth in holiday sales. Major retailers in the District plan to hire roughly the same number of seasonal employees as they did last year to meet holiday demand.\nAbout half of the auto dealers surveyed anticipate fourth-quarter sales to be similar to a year ago; the remaining half of auto dealers were evenly split between anticipating lower and higher sales. The majority of auto dealers surveyed report that their inventories are at desired levels. Most auto dealers saw no change in the product mix of the automobiles being sold.\nManufacturing and Other Business Activity\nPlans for manufacturing activity remained positive in the most recent reporting period. Firms in aviation, metals, furniture, industrial equipment, and automobile parts manufacturing plan to hire new employees and expand operations in the Eighth District. In contrast, one firm that manufactures industrial piping equipment reported plans to lay off workers. Reports from food manufacturers were mixed.\nPlans for activity in the District's service sector also remained positive. Firms in finance, information, and communications services reported plans for new hiring and expansion in the District. Reports from healthcare and transportation services firms were mixed.\nReal Estate and Construction\nHome sales decreased in the Eighth District on a year-over-year basis. Compared with the same period in 2013, September 2014 year-to-date home sales were down 4 percent in Louisville, 3 percent in Little Rock, 7 percent in Memphis, and 5 percent in St. Louis. September 2014 year-to-date single-family housing permits decreased in the majority of the District's metro areas compared with the same period in 2013. Permits decreased 8 percent in Louisville, 25 percent in Little Rock, and 3 percent in St. Louis. Permits increased 4 percent in Memphis.\nCommercial and industrial real estate market conditions in the District have been mixed. Contacts in Louisville reported strong leasing activity for industrial and commercial space. Contacts in Little Rock noted that prospective tenants are being pickier about commercial real estate space in northwest Arkansas. Contacts in St. Louis noted a strong industrial market in southwest Illinois. Commercial and industrial construction has been mixed throughout the District. Contacts in Little Rock noted that multifamily developers continue to look for new sites to build apartment complexes. A contact in Memphis reported two new developments planned for the downtown area that will include a mix of office space, apartments, and restaurants. A contact in St. Louis reported that although the office market is tightening, developers are reluctant to begin construction unless they have found their first tenant.\nBanking and Finance\nA survey of District banks showed that overall lending activity during the past three months was modestly improved compared with the same period last year. For commercial and industrial loans, credit standards eased somewhat, creditworthiness of applicants improved, demand was moderately stronger, and delinquencies were slightly lower. For prime residential mortgage loans, credit standards and creditworthiness of applicants remained unchanged, demand was unchanged to somewhat stronger, and delinquencies were slightly lower. For credit cards, credit standards were basically unchanged, demand was slightly stronger, creditworthiness of applicants was unchanged to slightly lower, and delinquencies were largely unchanged. For auto loans and other consumer loans, credit standards were basically unchanged, demand increased slightly, and delinquencies were unchanged to slightly lower. Creditworthiness of applicants decreased slightly for other consumer loans and remained unchanged for auto loans.\nAgriculture and Natural Resources\nAs of early November, the harvest of District corn, rice, and sorghum crops was over 90 percent complete, and the harvest of District soybean and cotton crops was close to 80 percent complete. District farmers will see substantially larger field crop production in 2014 than in 2013. Specifically, the District corn and soybean crops will be 7.5 and 15.1 percent larger, respectively, in 2014 than in the previous year. District coal production for October 2014 was about 5.1 percent higher than in October 2013. Coal production year-to-date was 2.8 percent higher than the corresponding period a year ago.\nEmployment, Wages, and Prices\nA survey of Eighth District businesses indicated that, in the past three months, prices and employment levels have grown slightly, while wages have grown modestly, compared with the same period last year. Sixty-five percent of contacts reported that prices charged to customers have stayed about the same relative to a year ago, while 21 percent reported an increase and 14 percent reported a decrease. Sixty-four percent of contacts reported that employment levels have stayed about the same, while 32 percent reported a slight increase and 5 percent reported a slight decline. Finally, 57 percent of contacts indicated that wages remained about the same, and 42 percent indicated that wages were higher.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

New York

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"Beige Book Report: New York\nDecember 3, 2014\nGrowth in the Second District's economy has picked up to a moderate pace since the previous report. Businesses report that cost pressures have abated somewhat, while selling prices are steady to up slightly. Service sector contacts indicate that business has picked up further since the last report, and manufacturers report modest improvement. Labor market conditions have continued to strengthen in recent weeks. General merchandise retailers report that sales have continued to trend up moderately, but auto dealers report that sales softened somewhat. Tourism activity has continued to show strength. Housing markets have shown signs of softening since the last report. Office markets have been generally steady, though the market for industrial space has strengthened. Finally, banks report increased demand for commercial mortgages, narrowing loan spreads for all types of loans, and continued declines in delinquency rates.\nConsumer Spending\nGeneral merchandise retailers say that sales have continued to trend up, running moderately ahead of 2013 levels. Sales came in slightly below plan in October--restrained by unseasonably warm weather--but slightly ahead of plan in early November. The snowstorm that hit large parts of metropolitan Buffalo in mid-November shut down many retailers and disrupted supplies, but the overall effect on sales remains to be seen. The pricing environment is described as more promotional than last year. Retailers are building inventories in advance of the upcoming holiday season.\nReports from auto dealers across upstate New York indicate that sales were flat to down somewhat since the last report, even before the winter storm. Rochester-area dealers continue to characterize new vehicle sales as essentially flat in October and early November. However, Buffalo-area dealers report that new vehicle sales weakened in October and November. The used-car market was also mixed, with Buffalo-area dealers describing sales as soft but Rochester-area dealers characterizing them as improving. Auto dealers in both areas note that both wholesale and retail credit conditions remain in good shape.\nConsumer confidence in the region rebounded strongly in October: The Conference Board's survey showed confidence rebounding to its highest level in more than a year in both New York State and the broader Middle Atlantic region (NY, NJ, PA). Tourism activity has been mixed but generally steady at a high level. Broadway theaters report that attendance and revenues continue to run moderately ahead of comparable 2013 levels.\nConstruction and Real Estate\nThe District's housing markets have taken on a somewhat softer tone in recent weeks. New York City's residential rental market has shown signs of softening: Rents in Manhattan and Brooklyn are reported to be steady to down slightly from a year ago, though they continue to rise modestly in Queens. Overall, New York City's co-op and condo market showed continued strength in October and early November--sales activity was down modestly from a year earlier but was still described as brisk, and lean inventories and strong demand continued to nudge up prices, which are reported to be running about 5 percent higher than a year ago. Single-family markets in Long Island and Staten Island--as well as in northern New Jersey, where there remains a large overhang of distressed properties--have lagged somewhat. The Buffalo-area market is characterized as having shifted from a seller's market to one that is more balanced, with sales activity leveling off and inventories continuing to build. Across New York State more broadly, the median selling price for single-family homes has edged down in recent months and was down slightly in October relative to a year earlier. New single-family construction activity has been sluggish, while multi-family construction has been robust.\nCommercial real estate markets have generally remained steady thus far in the fourth quarter. In Manhattan, office availability rates edged down to a six-year low, while asking rents leveled off and are up about 2 percent since the beginning of the year. Elsewhere around the New York City metropolitan region, office availability rates and asking rents were generally flat, except in northern New Jersey, where rents were up slightly. Office markets were also stable across most of upstate New York, except for metropolitan Buffalo, where the office availability rate has climbed to a multi-year high. Although a number of major office developments are under construction in New York City, new starts for office construction remain fairly depressed across the District. The market for industrial space has been a bit more robust: Asking rents are up from a year ago throughout the region, while availability rates have fallen to multi-year lows in and around New York City and have edged down in upstate New York. New starts for industrial construction have increased in recent months and are up from a year ago.\nOther Business Activity\nService-sector firms across the District report increasingly widespread growth in business activity, though manufacturing firms report that activity has expanded at a subdued pace. Nevertheless, contacts in both sectors express increasingly widespread optimism about the near-term outlook. Manufacturers generally report that selling prices remain flat, while service firms report modest increases; contacts in both sectors note that input price pressures overall have abated since the last report.\nThe labor market has continued to strengthen since the last report, with some reports of increased wage pressures. One employment agency contact reports that the labor market seems to be doing well but notes that it is difficult to gauge in light of the slowdown in permanent hiring that usually occurs before the holiday season. This contact also notes that employers are becoming more flexible on salaries and is optimistic about the outlook for 2015. Another major employment agency in New York City describes the job market as exceptionally strong and notes that qualified candidates are getting multiple offers; as a result, employers must often be willing to negotiate on pay and act quickly to fill job openings. In particular, financial firms are reported to be hiring more workers. One employment industry contact construes that retailers are hiring more seasonal help than last year, though a major retail chain indicates that it plans to hire about the same amount of seasonal help as in 2013. More generally, considerably more business contacts now say they plan to expand than reduce staffing levels in the year ahead.\nFinancial Developments\nSmall- to medium-sized banks across the District report increased demand for commercial mortgages but steady demand for other categories of loans. Bankers report little change in demand for refinancing. Credit standards continue to be reported as little changed across all loan categories. Respondents indicate that spreads of loan rates over cost of funds have declined across all loan categories, with the decrease most prevalent in commercial mortgages. Finally, bankers report ongoing decreases 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"

Chicago

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"Beige Book Report: Chicago\nDecember 3, 2014\nGrowth in economic activity in the Seventh District remained moderate in October and November. Contacts expressed optimism for the coming year, but noted concerns about weakening foreign growth and the possibility of another severe winter. Consumer and business spending, manufacturing production, and construction and real estate activity all increased moderately. Credit conditions changed little on balance. Cost pressures generally eased over the reporting period. Corn, soybean, wheat, and cattle prices rose, while milk and hog prices decreased.\nConsumer Spending\nGrowth in consumer spending continued at a moderate pace in October and November. Higher consumer confidence and lower gasoline prices led to a more positive outlook for the holiday season among most non-auto retailers. The early arrival of winter weather helped some retailers, while others were concerned that it would dampen sales during the holidays. Auto sales and leasing activity remained strong, supported by low interest rates and extended financing terms. Lower gasoline prices continued to spur demand for trucks and SUVs. Auto dealers also indicated that used vehicle sales were somewhat above expectations and that used car prices, which had been declining recently, had leveled off.\nBusiness Spending\nBusiness spending continued to grow at a moderate rate in October and November. Inventories were at comfortable levels for most manufacturers and retailers, though an early cold spell led to shortages of some winter-related retail items. There were also some reports of manufacturers stockpiling crucial inputs as insurance against another harsh winter. Capital expenditures and spending plans continued to rise, with expenditures primarily going toward replacing IT equipment and building new structures. Merger and acquisition activity also picked up. Actual hiring and hiring plans continued to increase at a moderate pace. Some retailers reported slightly higher seasonal employment levels than last year, while others reported boosting the hours of existing employees in lieu of hiring more seasonal staff. Contacts again noted strong demand for skilled workers, particularly for those in professional and technical occupations and skilled manufacturing and building trades. In addition, a staffing firm reported an increase in demand from small- and medium-sized businesses.\nConstruction and Real Estate\nConstruction and real estate activity increased moderately over the reporting period. Residential construction rose in both the single- and multi-family markets. Builders expected that an improving economy and continued low interest rates would help support steady growth in new construction. Home sales picked up more than expected in both urban and suburban markets. Inventories of existing homes for sale also increased, as rising house prices prompted sellers to enter the market. Nonresidential construction expanded at a moderate pace, led by demand for industrial and office buildings. Commercial real estate activity increased broadly, as vacancies ticked down and rents rose. Contacts noted that sales of existing properties with tenants already in place were particularly strong. Leasing of industrial, office, and retail space increased.\nManufacturing\nManufacturing continued to grow at a moderate pace in October and November. Activity in the auto, aerospace, and energy industries remained strong. An automaker reported adding a third shift to meet expected demand for new models. However, some auto suppliers noted a delay in orders while automakers retooled production facilities. Steel production grew steadily. Steel prices decreased and imports increased, due to weaker demand abroad. Most specialty metals manufacturers reported that order books reflected solid demand. While demand for heavy machinery grew slowly in general, there were marked differences across product categories: Sales of construction machinery picked up, but sales of agricultural and mining equipment remained weak. Manufacturers of household appliances and construction building materials reported an increase in shipments, and were encouraged that the improving labor market would continue to translate into stronger housing demand. Utility contacts reported that weather-adjusted load growth was up slightly as the number of residential customers increased.\nBanking and Finance\nCredit conditions were little changed on balance in October and November. Financial market volatility increased significantly in mid-October, but declined over the remainder of the reporting period. Business loan demand was mixed. Banking contacts noted lower demand from middle-market firms, but an increase in demand from small businesses for financing equipment and structures. Utilization of credit lines for working capital declined across market segments. Consumer loan demand increased, with continued strength in auto lending and an increase in mortgage refinancing driven by lower mortgage rates.\nPrices and Costs\nCost pressures generally eased over the reporting period. Energy prices and iron ore and steel prices decreased since the last report. In contrast, several contacts reported transportation cost increases. In addition, with strengthening demand a number of manufacturers were able to raise prices and expect to put through further increases in coming quarters. Retail prices were little changed overall. Wage pressures continued for skilled workers as many contacts indicated shortages of available labor, but wage pressures remained less pronounced for unskilled workers. Non-wage costs changed little on balance, though a number of contacts reported rising health insurance costs, some of which was being passed on to employees. However, several contacts noted that they were re-examining their overall compensation policies because they are worried about losing talent.\nAgriculture\nThe District harvest was behind a normal year's pace even before early snows delayed progress in some parts of the District. Still, yields should set records for the District overall. Corn and soybean prices moved up during the reporting period, driven by the slow harvest, farmers storing much of the crop for later sale, and some shipping delays. Wheat prices rose as well. Milk and hog prices declined from the prior reporting period, but operations remained profitable. Cattle prices moved higher with signs of herd expansion. Weights for hogs and cattle at slaughter were very high, helping boost the supply of meat coming to market.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"

National Summary

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"Beige Book: National Summary\nDecember 3, 2014\nPrepared at the Federal Reserve Bank of Chicago and based on information collected on or before November 24, 2014. This document summarizes comments received from business and other contacts outside the Federal Reserve and is not a commentary on the views of Federal Reserve officials.\nReports from the twelve Federal Reserve Districts suggest that national economic activity continued to expand in October and November. A number of Districts also noted that contacts remained optimistic about the outlook for future economic activity. Consumer spending continued to advance in most Districts, and reports on tourism were mostly positive. Employment gains were widespread across Districts, and Districts reporting on business spending generally noted some improvement. Demand for nonfinancial services generally increased. Manufacturing activity strengthened in most Districts. Construction and real estate activity expanded overall, but at a pace that varied by sector and by District. Lending typically held steady or increased. Crop yields were generally good, although overly wet or dry conditions were an issue in some Districts. Most crop prices were lower than last year, but livestock prices were higher. Energy and mining activity was higher on net, though lower oil prices were a concern for the oil industry in the Atlanta and Dallas Districts. Overall price and wage inflation remained subdued.\nConsumer Spending and Tourism\nConsumer spending continued to trend higher in most Districts in October and November. Some contacts viewed lower gasoline prices as a contributing factor to higher consumer spending, and an early cold spell helped spur sales of winter apparel in several Districts. Both the Richmond and San Francisco Districts pointed to durable goods purchases as a source of strength. Restaurant sales were up in Cleveland and San Francisco but down in Kansas City. Retailers in many Districts were optimistic about the upcoming holiday season. Auto sales were particularly strong in Richmond, Atlanta, Chicago, and San Francisco, and lower gasoline prices boosted sales of SUVs and light trucks in Philadelphia, Cleveland, and Chicago.\nTourism reports were mostly positive for the reporting period. Early-winter weather conditions boosted activity in Richmond and Minneapolis as some ski resorts were able to open early. Richmond and San Francisco reported rising hotel occupancy rates and Philadelphia noted an increase in hotel revenues. Contacts in the Atlanta District noted an increase in the number of domestic and international visitors relative to last year and strong advance bookings for hotels and conferences for the first half of 2015. New York indicated that tourism was generally steady at a high level, with Broadway theater attendance and revenues moderately higher than a year ago. In contrast, tourism activity decreased further in the Kansas City District, but was expected to improve modestly in coming months.\nHiring and Business Spending\nEmployment gains were widespread across Districts in October and November. Boston reported increased employment in the software and IT sectors, and New York noted that financial firms were hiring more workers. Cleveland indicated that manufacturing, construction, and freight transportation payrolls were increasing, and Richmond cited stronger hiring by service-sector firms. Atlanta reported sizable gains in leisure and hospitality employment. Several Districts noted an increase in temporary staffing as well as an increase in temporary-to-permanent job transitions. Hiring plans increased in New York, Chicago, and St. Louis. With labor market conditions strengthening, contacts in the Kansas City and Dallas Districts noted that firms were having increased difficulty retaining key workers. Various Districts continued to report that firms had difficulties filling positions in IT and engineering, legal and health-care services, management, skilled manufacturing and building trades, and transportation and warehousing. Most Districts reported little change in holiday-related hiring relative to last year, though there were some reports of slightly higher rates of seasonal hiring in New York and Chicago.\nDistricts reporting on business spending noted some improvement overall. Inventories were generally reported to be in line with sales. Richmond and Chicago noted some precautionary inventory building by retailers and manufacturers as insurance against another harsh winter. Reports on capital expenditures, both current and planned, were generally positive. Boston and Cleveland reported that retailers were investing in IT equipment and software to support e-commerce. Manufacturers in several Districts were expanding capital budgets both to replace existing equipment and to expand capacity. Freight companies in the Cleveland District were holding to plans to gradually replace an aging fleet and expand capacity. St. Louis and Minneapolis noted an increase in planned capital spending by service-sector firms. Cleveland, Richmond, Chicago, and Dallas cited an increase in mergers and acquisitions.\nNonfinancial Services\nDemand for nonfinancial services rose in a number of Districts in October and November. Several Districts reported broad-based growth in demand for staffing services. Growth in professional business services fell in Kansas City, but the Richmond District reported gains in accounting business and Dallas experienced expansions in legal and insurance services. Demand for technology services rose in the Boston, St. Louis, Minneapolis, and San Francisco Districts. San Francisco reported strong demand for cloud computing services. Growth in transportation services was uneven across Districts, but Cleveland continued to report strong demand, to the extent that shippers were running into capacity constraints. Various Districts reported increases in shipments of agricultural products, industrial machinery, oil and gas production materials, appliances, apparel, auto parts, e-commerce goods, and steel. Richmond reported increased port activity, especially for imports, but a decline in coal exports.\nManufacturing\nManufacturing activity generally advanced during the reporting period. The automotive and aerospace industries continued to be sources of strength. Steel production increased in Cleveland, Chicago, and San Francisco. Fabricated metal manufacturers in the Chicago and Dallas Districts noted widespread growth in orders. Dallas reported that domestic sales for plastics were strong, while demand for plastics was steady in Richmond and declined in Kansas City. Chemical manufacturers in the Boston District indicated that the falling price of oil relative to natural gas had made U.S. producers less competitive, because foreign chemical producers rely more heavily on oil for feedstock and production. St. Louis, Minneapolis, and Dallas reported that food production was little changed on balance, but production in Kansas City continued to decline. Chicago and Dallas indicated that shipments of construction materials increased. Manufacturers of heavy machinery in the Chicago District cited improvements in sales of construction machinery, but reported ongoing weak demand for agricultural and mining equipment. High-tech manufacturers in Boston, Dallas, and San Francisco noted steady growth in demand. Biotech revenue increased in the San Francisco District.\nConstruction and Real Estate\nConstruction and real estate activity expanded overall in October and November, but saw a fair amount of variation across sectors and regions. Residential construction increased on balance across the Districts and multifamily construction remained stronger than single-family construction in a number of Districts. Reports on residential real estate activity were mixed. About half of the Districts reported an increase in home sales. Many Districts indicated that sales in the multifamily sector were stronger than sales in the single-family sector. Home prices were little changed in most Districts, although prices increased in the Richmond, Atlanta, Dallas, and San Francisco Districts. Nonresidential construction rose in most Districts. Construction of office space was relatively strong in some large urban areas, such as New York City and Philadelphia. Industrial construction was particularly strong in the Cleveland, Chicago, and Dallas Districts. Commercial real estate activity also increased in many Districts, with declining vacancies and rising rents for office space; especially strong activity was noted in the central business districts of some large urban areas. Vacancies for commercial and industrial space also dropped in several Districts.\nBanking and Finance\nLending activity improved on net. A few Districts noted aggressive competition on loan pricing and terms or an easing of loan standards. Business lending increased for most types of loans. Boston, New York, and Richmond cited an increase in demand for commercial mortgages, and commercial and industrial lending increased in Philadelphia and St. Louis. San Francisco reported an increase in demand for small business refinance loans and noted private financing activity and venture capital activity were both strong. Chicago also cited stronger loan demand from small businesses for financing equipment and structures. Dallas indicated that real estate lending increased, with strength reported in loans for both single-family and multifamily construction projects. In contrast, Kansas City reported lower demand for agricultural loans, and Chicago noted lower utilization of credit lines for working capital. Consumer lending also increased. Several Districts reported continued strength in demand for auto loans. Richmond, St. Louis, and San Francisco noted an increase in credit card lending. Residential lending increased in a number of Districts, reflecting a mix of new mortgages, refinancings, and home equity lines of credit. Cleveland and Richmond indicated that first-time homebuyers continued to face challenges in qualifying for mortgages, although contacts in Boston were optimistic that the new Qualified Residential Mortgage rule would be helpful in this regard.\nAgriculture and Natural Resources\nAgricultural conditions were mixed across the Districts. Livestock operations were more profitable than a year ago; but with crop yields generally at above-average to record-high levels, lower crop prices were depressing farm incomes. Harvests were ahead of their normal pace in most Districts reporting on agriculture. However, excess moisture delayed harvests in some Districts, affected the quality of cotton in the Dallas District, and damaged wheat and barley crops in the San Francisco District. In contrast, drought conditions affected the Richmond, Atlanta, and San Francisco Districts, as well as parts of the Dallas District. Dry weather delayed tree harvests in Richmond, even as Christmas orders picked up. Compared with a year ago, prices were lower for corn, soybeans, wheat, and hay, but higher for milk, dairy, poultry, hogs, cattle, and tomatoes. Livestock producers benefited from lower feed costs, and Chicago and Kansas City noted expansions in cattle herds. Richmond and San Francisco reported increased exports of agricultural products, but Dallas reported lower dairy exports.\nNatural resource activity was strong overall. Oil and natural gas exploration, drilling, and extraction remained at high levels in the Cleveland, Richmond, Minneapolis, Kansas City, and Dallas Districts, with expansions in drilling activity in Kansas City and Dallas. Atlanta reported that the recent drop in oil prices led firms to reevaluate their operations, though steady production is anticipated for both deepwater and onshore drilling; in the Dallas District, lower oil prices weighed on the outlook for drilling activity. Natural gas prices decreased slightly as inventories grew. Coal production in the Cleveland and St. Louis Districts was up from a year ago. Since the previous report, mining activity increased in the Minneapolis District. Healthy demand for timber was noted by San Francisco, leading to increased shortages of equipment and skilled loggers.\nPrices and Wages\nOverall price and wage inflation remained subdued in October and November. Price increases for raw materials were generally muted, though there were some exceptions, such as prices for certain agricultural products and building materials. Several Districts cited the decline in the price of oil over the reporting period and its effects on gasoline and diesel fuel prices. However, transportation costs rose in some Districts where capacity constraints were an issue. Chicago and San Francisco reported lower steel prices, but Dallas noted an increase in fabricated metals prices. Pass-through of higher costs to downstream prices remained limited, although Chicago, Minneapolis, and Dallas reported an uptick in the number of firms raising or expecting to raise prices. New York and Cleveland noted an increase among retailers in holiday promotional activity relative to last year, and Philadelphia indicated that retailers would be using promotions to extend the shorter-than-usual holiday shopping season.\nA number of Districts reported slight to moderate increases in labor costs during the reporting period. Upward wage pressures continued to be evident for certain types of occupations and for skilled workers. New York, Chicago, and San Francisco reported that employers were adjusting compensation to win well-qualified job candidates or to retain or give raises to high-value, long-term existing employees. In addition, Atlanta noted nascent signs of wage pressures for lower-skilled jobs, whose wages have been flat for several years. Minimum wage increases were said to be a source of higher labor costs in the Boston, Cleveland, and San Francisco Districts. Boston, Chicago, and Dallas noted actual or prospective increases in health insurance costs; in contrast, San Francisco indicated that increases in health insurance premiums for the coming year were low by historical standards. Some of the higher costs associated with health care were reportedly being passed on to employees.\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 3, 2014\nReports from Sixth District business contacts remained largely positive with most noting that economic conditions were improving at a steady pace over the reporting period. Most contacts are optimistic about the near-term outlook with nearly all contacts either expecting growth to be the same or higher than the most recent reporting period.\nRetail sales were up slightly from the previous report while auto sales across the District were stable at a high level. Reports from the hospitality sector remained positive as the sector experienced increased activity from both domestic and international travelers. Residential real estate contacts noted that existing and new home sales were flat to slightly down from a month ago. Home prices improved modestly and inventory levels were relatively flat for both brokers and builders. Commercial real estate contacts reported increased activity, particularly in apartment construction. Manufacturers indicated that new orders and production increased since the previous report. Bankers indicated that loan activity was flat to slightly up for the reporting period. The District continued to experience modest job growth. On balance, input cost and wage pressures remained subdued.\nConsumer Spending and Tourism\nSince the previous report, District retail contacts indicated that sales were up slightly. Some noted that the recent decline in gasoline prices allowed consumers to shift some of their spending towards discretionary items. Light vehicle sales continued at a relatively strong pace. Looking ahead, District retailers are optimistic about the upcoming holiday season.\nReports on leisure and business travel remained positive since the previous reporting period. Hospitality contacts reported high occupancy rates at hotels and resorts, and the number of domestic and international visitors to the District increased from a year ago. Tourism contacts anticipate a robust holiday season and a solid start to 2015 with strong advance bookings in the hotel and conference segments for the first two quarters of next year.\nReal Estate and Construction\nDistrict brokers indicated that growth in home sales has slowed since the previous report. A growing share of contacts reported that home sales fell short of their plan in October, and most contacts noted that home sales were flat or down slightly compared with a month ago. Brokers continued to report modest home price appreciation. The majority of brokers indicated that inventory levels remained flat from the prior month's level and noted that buyer traffic was flat to down. Brokers indicated that they expect home sales to remain flat or decline slightly over the next three months.\nReports from District builders have been a bit less positive, on net since the previous report. A majority indicated that construction activity met their plan in October, but that new home sales had fallen short of their plan. Many builders characterized construction activity and new home sales as flat to slightly down from the previous report, while the inventory of unsold homes was flat to slightly up. They continued to report modest home price appreciation. Their outlook for new home sales and construction activity over the next three months was mixed.\nDistrict commercial real estate brokers continued to report improving demand, though they cautioned that the rate of improvement varied by metropolitan area, submarket, and property type. Commercial contractors noted continued strength in apartment construction and indicated that the level of nonresidential construction activity continued to increase modestly. The outlook among District commercial real estate contacts remained fairly optimistic.\nManufacturing and Transportation\nDistrict manufacturers reported increased activity in October. Solid gains were seen in new orders and production levels were notably higher compared with the previous reporting period. Employment levels increased modestly, and raw materials prices rose slightly for some manufacturers. However, the outlook among manufacturers is less optimistic than the previous report with less than a quarter of contacts expecting production levels to increase over the next three to six months.\nTransportation activity in the District continued to expand from the previous reporting period. Trucking contacts reported increased shipments of construction materials such as drywall and bulk cement. Rail shipments of agricultural products were up and volumes of chemical products, such as crude oil, liquefied natural gas, and sand for hydraulic fracturing, posted double-digit increases from a year ago. Logistics and delivery contacts indicated that recent growth was driven mostly by e-commerce. The majority of District transportation contacts expect even faster growth in the coming months, over and above the usual seasonal increase.\nBanking and Finance\nReports on lending activity were mixed and varied by geographic area. In some areas, residential real estate lending was flat but commercial lending picked up, while in other parts of the District, mortgage lending consisted of a mix of new construction, refinancing, and home improvement loans. Regulatory requirements continued to be a concern for community bankers competing with larger banks for loans. Competition for qualified borrowers was characterized as \"fierce,\" as low pricing and relaxed terms were being offered by some institutions to attract clients. Business contacts reported that credit availability was little changed from the previous report, with large businesses having easy access to credit and small businesses having more-restricted access. Some contacts expect modest improvements in lending activity through the end of the year.\nEmployment and Prices\nNearly all states in the District experienced job growth, with 39,900 jobs added on net in September. Sectors with payroll additions varied by state, though leisure and hospitality gains were relatively widespread and sizeable across District states. The unemployment rate declined 0.1 percentage point from 6.9 percent to 6.8 percent during the same period. However, contacts continued to report challenges filling certain positions, namely construction and skilled trade jobs, drivers, and information technology positions. Some businesses also indicated that they were finding it increasingly difficult to fill low-skill positions.\nInput cost pressures remained muted across most sectors, with some easing of the pressure that had been reported earlier in the year. Firms' pricing power remained limited, According to results from the Atlanta Fed's October Business Inflation Expectations survey, expectations for the coming year continued to hover around 2 percent. There was little evidence of broad-based acceleration in wages outside of trucking, construction, banking, and information technology. However, there were nascent signs of some mounting wage pressures for lower-skill jobs--many of whose nominal wage rates have been flat for several years.\nNatural Resources and Agriculture\nIndustry contacts reported that the recent drop in oil prices led regional exploration and production firms to evaluate operational flexibility, cost- management strategies, and extraction technologies, although steady production is anticipated in both deepwater and onshore drilling. Contacts also shared that the supply of natural gas continued to grow faster than demand even after adjusting for seasonal factors.\nLarge parts of Alabama and Georgia--and to a lesser extent, parts of the Florida panhandle, Louisiana, and Mississippi--experienced varying degrees of drought ranging from abnormally dry conditions to a few isolated areas of severe drought. Although heavy rain in early October delayed peanut harvesting in some parts of the District, harvests in Alabama, Florida, Georgia, and Mississippi were ahead of their 5-year average. Alabama and Georgia cotton crop harvests were ahead of their 5-year averages while recent rain in parts of Tennessee delayed some of their cotton harvesting activities.\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 3, 2014\nBusiness contacts in the First District indicate that activity is generally increasing. With a few exceptions, retailers and manufacturers report year-over-year increases in sales or revenue. Firms in both staffing and software and IT services cite solid or strong demand as they did when contacted three months ago. Most commercial real estate markets in the region continue to expand modestly, while residential real estate markets remain unsettled, with most of the New England states seeing increases in the number of homes sold and declines in median sales prices from a year earlier. Net hiring is occurring in the sectors with more robust demand; pay levels are rising somewhat for temps but are generally flat in software and IT services. Some manufacturers and retailers cite modest price increases, while software and IT services firms are holding prices steady.\nRetail\nRetail firms contacted this round report year-over-year increases in total sales ranging from zero (flat) to 6.5 percent. Their year-over-year comparable-store sales results are more varied, ranging from down 4 percent to up 7.5 percent. Inventories are well-managed. Some contacts report that their prices remain steady, while others indicate prices of some items are going up a bit. The reasons given for these modest price increases include passing on higher vendor prices and paying for increases in the minimum wage. Retailers are continuing to invest in software and support for online selling channels.\nAll respondents say that they have seen continuing improvement in sales over the course of the year, that consumers appear to be more confident, and that the U.S. economy seems to be experiencing a real, albeit modest, rise. Contacts expect the holiday sales season to continue this positive momentum.\nManufacturing and Related Services\nOf ten manufacturers responding this cycle, eight firms report stronger sales than a year earlier. The two citing weaker sales are both in semiconductor-related industries. One, a maker of testing equipment, is actually very positive about sales, saying that as long as people want smart phones, there will be strong demand for semiconductor testing equipment. The other is in the semiconductor manufacturing equipment business and is also quite optimistic overall. Manufacturing contacts generally say North America is an area of strength and Europe and Latin American are relatively weaker. A manufacturer of construction tools says the strengthening dollar is a \"headwind\" and has revised sales growth down slightly as a result. Firms report no significant movements in inventories. Capital spending is up, but more or less in line with plans at all contacted firms.\nThe pricing environment is reportedly benign. Raising prices is not easy, but firms do not report tremendous pressure to cut prices. Costs are said to be under control as well. One firm in the chemical industry cites falling oil prices as a problem because chemicals are produced in the United States using natural gas whereas in the rest of the world, they are produced using oil. As a result, the fall in oil prices over the last few months has made foreign rivals more competitive, partly reversing U.S. chemical firms' prior advantage resulting from declines in the price of natural gas relative to oil in recent years.\nNone of our contacts reports large increases or decreases in employment. A manufacturer of health and fitness equipment successfully hired technically skilled workers but only with great difficulty. A defense contractor says uncertainty about the federal budget makes workers reluctant to accept offers from them. A maker of medical equipment indicates that recent wage increases are at the higher end of their normal range. In general, responding manufacturers have a positive outlook on business conditions.\nSoftware and Information Technology Services\nFirst District software and information technology services contacts generally report strong demand in recent months, with most citing revenue increases of 7 percent to 20 percent year-over-year. This sustained business growth is attributed to the improving macroeconomy, strength in the manufacturing sector, and high consumer demand for software products currently on the market. Only one contact--in the healthcare sector--reports a decrease in year-over-year nominal revenue, reflecting the expiration of federal stimulus related to health records software. Selling prices have generally remained stable. Most firms are adding to their headcounts through acquisition, increased utilization of contractors, or overall business expansion. Wages have largely remained constant in recent months. One contact notes upward wage pressure for higher-level R&D and sales positions for which demand exceeds supply. Most firms are holding capital and technology spending steady, with one firm increasing spending to introduce a new software platform. Looking forward, most contacts are optimistic about current trends continuing; they expect flat to high-single-digit year-over-year revenue growth. Some respondents express concerns about continued weakness in Europe and Asia, stock market volatility, and the overall macroeconomy.\nStaffing Services\nNew England staffing contacts generally report increased business activity through November, with all but one contact citing a year-over-year increase in revenue. This uptick in demand reportedly reflects growth in the healthcare sector and improved business confidence. Furthermore, several contacts note increases in both direct hiring and the temporary-to-permanent conversion rate. Labor demand is strong, with increases for a variety of positions across the healthcare, commercial real estate, legal, customer service, manufacturing, and warehousing sectors. Contacts say labor supply continues to be tight, particularly for IT, legal, and nursing occupations. Their strategies to attract top candidates include networking, social media outreach, online recruiting, and offering modest wage premiums. Both bill and pay rates have trended upward in recent months. Most contacts are more optimistic than three months ago about the rest of the year, with year-end revenue growth forecasted to be in the low-to-high single-digit range. The main factors expected to affect business in upcoming months are winter and holiday seasonal effects, availability of workers, and health insurance costs from the Affordable Care Act.\nCommercial Real Estate\nCommercial real estate market trends in the First District are mostly unchanged since the last report. According to contacts, Boston's office market continues to see declining vacancy rates and modest rent increases. Investor demand for office and multifamily properties in Greater Boston remains very robust. A Rhode Island contact says business sentiment is improving based on beliefs that the newly elected governor will focus on job creation. Office leasing activity in Providence saw a modest rebound following a dip late in the third quarter, with robust demand in the Class B sector; there are, however, some concerns about plans among Class A office tenants to reduce space needs in 2015. Construction activity remains limited in the state, but includes a growing amount of build-to-suit activity in the industrial sector. In Hartford, market fundamentals are unchanged amid flat leasing demand, and there is no new construction activity. In Portland, investment sales increased across diverse property types and industrial leasing activity picked up since the last report, while office market fundamentals--including vacancy rates and rents--are roughly unchanged since one year ago and office leasing activity held steady in recent weeks. A few new infrastructure projects and some industrial construction activity are underway, and set to increase, along Portland's waterfront. A regional banking contact saw a modest increase in commercial real estate loan inquiries, including an uptick in loan demand for industrial properties in the Boston area; at the same time, he reports that the flow of lending activity at his bank is below its year-ago level.\nThe outlook remains largely optimistic for the Boston and Portland commercial real estate markets. For Rhode Island, a modestly optimistic outlook for commercial real estate demand was qualified by contacts citing risks to the state's overall economic fortunes, including a looming state budget deficit. In Hartford, a contact foresees slow-to-negligible growth in economic activity and accordingly slow improvement in commercial real estate fundamentals.\nResidential Real Estate\nIn September, closed sales of single-family homes increased from a year earlier in four of the six New England states. Massachusetts experienced declining year-over-year sales for an eighth consecutive month; contacts in New Hampshire were unavailable to provide data. The median sales price for single-family homes decreased in three of the four states with sales increases; Maine was the exception, with a year-over-year increase in median sales price. Prices in Massachusetts remained flat, ending 23 consecutive months of year-over-year price rises. Massachusetts contacts say buyers are not willing to overextend themselves financially as home prices move higher, but some expect prices to remain flat, some say they will decline, and others expect an increase in the coming months; among the latter, one contact notes that preliminary October data show a modest increase in price compared to October 2013. Scarcity of inventory remains a concern in Massachusetts, with another consecutive month of year-over-year declines in inventory. Contacts in Massachusetts say new listings are insufficient to meet demand; they emphasize a need for new construction and for more sellers to list properties. By contrast, inventories are plentiful in Vermont, where there is more than 20 months of supply; realtors typically say a market is balanced when there is six months of supply--the current level in Rhode Island. Contacts across the First District believe recent market trends will continue in coming months.\nIn the condominium market, September sales were mixed across the region, decreasing in Rhode Island, Massachusetts, and Maine, while increasing in Connecticut and Vermont compared with a year earlier. The change in median sales prices of condos also varied across the region, with year-over-year increases in Rhode Island, Maine, and Vermont, but decreases in Connecticut and Massachusetts; this represents the first price decrease for condos in Massachusetts after 15 months of increases. As with single-family homes, condo inventory remains a concern in Massachusetts, where year-over-year inventory decreases have continued for almost four years.\nResidential real estate contacts say they are generally content. Many contacts are optimistic about the new Qualified Residential Mortgage rule, expecting it to ease down payment and credit score requirements and thereby help qualified consumers afford and purchase a house.\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 15, 2014\nSixth District business contacts described economic conditions as improving at a modest pace in September. The outlook among firms remains largely optimistic with the majority of contacts expecting near-term growth to be sustained at or slightly above current levels.\nRetailers cited a slight improvement in sales activity since the previous report. Auto dealers continued to note increasing sales. Hospitality contacts continued to report strong activity, with increasing demand from both leisure and business travel. Residential real estate contacts indicated that existing and new home sales and prices remained ahead of last year's levels, and inventory levels were down from a year ago. Commercial real estate brokers continued to note improved demand and modest levels of construction for most property types. Multifamily construction, in particular, continued to increase across much of the District. Manufacturers indicated that overall activity expanded with new orders and production increasing since the previous report. Banking conditions improved for both businesses and consumers as loan volume increased slightly, on balance. Payrolls across the region expanded slowly and businesses continued to report difficulties finding qualified workers. Contacts indicated wages grew at a steady pace. Some contacts expressed concerns about the rising costs of specific inputs.\nConsumer Spending and Tourism\nDistrict retailers reported a slight improvement in sales since the previous report. Young shoppers were described as being confident and willing to spend, while older consumers were reportedly being more cautious. The battle between online sales versus brick-and-mortar store sales continued as merchants indicated that competition from rival stores' online sales was having an adverse effect on in-store traffic. However, the outlook among retailers for the remainder of the year remains optimistic. District auto dealers not only continued to see increased consumer sales, but saw strong demand from commercial businesses as well.\nReports on tourism and business travel remained upbeat. Tourism activity across the region was strong with high occupancy numbers at hotels and resorts. The development of various new entertainment venues has increased demand for leisure travel and business travel has been solid year to date. Overall, hospitality contacts maintain a positive outlook for the remainder of 2014 and the beginning of 2015.\nReal Estate and Construction\nMany District brokers reported growth in activity since the previous report. Most brokers indicated that home sales met or exceeded their plan for the reporting period, but a growing share of contacts reported that sales fell short of their plan. The majority of brokers indicated that inventory levels remained flat or continued to decline on a year-over-year basis and home prices were ahead of their year-earlier level. Regarding the outlook, optimism about future sales activity waned from earlier reports with most brokers expecting home sales to remain flat or decline slightly over the next three months with some of the expected decline being attributed to seasonal factors.\nReports from District builders remained fairly positive. The majority reported that recent construction activity either met or exceeded their plan for the period. Many builders noted that construction activity and new home sales were ahead of their year-ago levels. Half of contacted builders indicated that their inventory of unsold homes was down from a year ago. Builders also continued to report modest home price appreciation. The outlook among builders for new home sales and construction activity remains positive.\nCommercial real estate brokers across the District continued to report improving demand since the previous report, though they cautioned that the rate of improvement varied by metropolitan area, submarket, and property type. Commercial contractors reported that apartment construction remained robust. Contacts also noted that the level of construction activity across other property types continued to increase modestly. The outlook among District commercial real estate contacts remains fairly optimistic.\nManufacturing and Transportation\nDistrict manufacturers reported that activity expanded compared with the previous reporting period. Contacts noted growth in new orders and production; in addition, they indicated that finished inventory levels rose and commodity prices continued to increase. Respondents noted that supplier delivery times for inputs were slightly shorter. Relative to the previous report, a larger share of purchasing agents polled during the reporting period expect production to increase over the next three to six months.\nOverall, transportation contacts reported an improvement in demand since the previous report. District railroads cited increases in total carloads, led by significant strengthening in shipments of petroleum products; grain; and military, machinery, and transportation equipment. Intermodal traffic continued to increase on a year-over-year basis. Ports in the District reported a notable increase in container traffic and substantial growth in overall cargo tonnage in September. Trucking companies continued to experience strong freight demand through the end of September.\nBanking and Finance\nContacts described the financing environment as improving for both businesses and consumers, with a growing number of projects being financed. Competition for high-quality borrowers remained very keen and credit demand was mixed. Line-of-credit utilization at banks remained relatively flat with few requests for increased limits on short-term credit. Demand for some other loan types was up from year-ago levels.\nEmployment and Prices\nWith a few exceptions, contacts reported that their staffing levels were increasing slowly. The District added 51,100 jobs on net in August and the unemployment rate rose 0.2 percentage point to 6.9 percent. Nearly all states in the District added to payrolls in August, with the exception of Mississippi, which lost 4,600 jobs on net. Businesses across the region continued to report difficulty finding qualified workers. Similar to the previous report, hiring challenges appeared to be both intensifying and broadening across the skill and occupation spectrums.\nIn general, firms indicated that their pricing power remained relatively weak, although a growing number of contacts expect improved margins over the coming year. Contacts in some sectors, including transportation and construction, continued to report concerns about rising input costs, though a slower pace of commodity price increases is anticipated to offer some respite going forward. Respondents to the latest business inflation expectations survey indicated that, on average, businesses anticipate unit costs to rise 2.1 percent over the coming 12 months. There were some reports of upward pressure on starting salaries; however, average compensation increases for most contacts remained anchored between two and three percent per year.\nNatural Resources and Agriculture\nContacts in the oil industry reported that there was an excess supply of crude oil, with recent prices well below year-ago levels. Gulf Coast refinery utilization increased over the last year. Imports of crude oil fell; exports were slightly above year-ago levels, though some contacts expressed concern that the strength of the dollar has made U.S. oil exports more expensive for the rest of the world.\nParts of Alabama, Florida, and Georgia experienced abnormally dry to severe drought conditions. Lower corn prices continued to benefit poultry and livestock producers that rely on corn for feed. The USDA announced a new financial assistance program for eligible Florida citrus growers to help with the removal and replacement of stock affected by citrus greening.\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 15, 2014\nDistrict economic conditions improved modestly since the previous report. Manufacturing advanced as shipments and new orders grew modestly, and inventories of finished goods and raw materials rose at a faster pace. Retail sales rose on pace with our last report, and the non-retail service sector expanded moderately. Tourism remained robust, and executives anticipate a strong holiday season. Business lending was unchanged on balance, and competition among bankers remained intense. Residential real estate activity increased in recent weeks, albeit at a somewhat slower pace, and reports on housing inventory were mixed. In agriculture, crop harvesting was on schedule, with price declines for some crops. In the energy sector, coal production and prices declined. More natural gas wells were brought online. On balance, District labor market reports indicated greater demand for workers. According to our latest surveys, manufacturing employment grew modestly and average wages rose slightly. Service-sector employment and wages increased at a moderate pace.\nManufacturing\nManufacturing activity increased in recent weeks, and expectations for the months ahead remained positive. Shipments and new orders grew modestly, and inventories of finished goods and raw materials rose at a faster pace relative to the previous report. A medical equipment manufacturer in North Carolina reported continued robust growth in new orders during the past six weeks and noted optimistic customer expectations for the months ahead. Additionally, a North Carolina electrical equipment manufacturer indicated that orders were up, and that his firm's increased capital spending had improved its shipment capability. A source said that in West Virginia, large manufacturing firms were hiring and investing, but that smaller manufacturers were not making capital investments. A Virginia food manufacturer reported that order volume was flat during the past month, but that he expected improvement during the holidays. However, an executive at a North Carolina textile manufacturer stated that revenues had slowed and retailers were holding back on new orders. Prices of raw materials and finished goods rose at a slightly faster pace since the last report.\nPorts\nDistrict port officials reported that activity remained strong, suggesting that the peak import season, which had begun earlier than usual, was extended rather than just shifted forward. Loaded container traffic rose further for the major ports, primarily for imports; for other traffic as well, imports continued to outpace exports. Some of the softness in exports was attributed to rail and trucking issues, such as slowdowns from bottlenecks in rail service and truck driver shortages, which have delayed movement of inland cargo to the ports. Port contacts reported strong exports of autos, as well as of containerized grain and soybeans. Imports were led by commodities related to housing and retail, such as appliances, flooring, apparel, and footwear. According to one official, shipping lines have been consolidating and upgrading to larger ships.\nRetail\nRetail sales rose on pace with our last report. Big-ticket sales grew solidly, but somewhat more slowly relative to the previous report. Sales picked up for suppliers of retail and wholesale building materials. Wholesalers of heavy equipment also reported stronger sales. A car dealer near Washington, D.C. said he expects this year's sales to be about the same as the record sales of a year ago, with dealer incentives helping to move current-year models. According to a central Virginia retail representative, current strong sales of furniture, appliances, and electronics may signal that consumers have more cash, but early big-ticket sales may leave less for discretionary spending during the later weeks of the holiday season. In contrast, the manager at a discount store in the Hampton Roads area of Virginia said that there was almost no change in sales revenues during the past six weeks, but customers were already making holiday purchases using the store's lay-away program. A grocery store manager in southwestern Virginia commented that diminishing incomes for coal mining families, together with rising meat prices, have resulted in lower sales per purchase. Retail price increases slowed since the previous report.\nServices\nFirms in the non-retail service sector reported moderate growth in recent weeks. Technology firms, engineering companies, and a few smaller healthcare facilities reported stronger revenue growth. According to a North Carolina hospital source, it has been a good year for revenues, and that the hospital was able to make small price increases. In contrast, an executive at a large healthcare system said that cost reductions, including hiring restrictions, were continuing and that their projections were for reduced inpatient volumes. While executives at a couple of accounting firms in North Carolina reported a pick-up in business, a CPA at a Maryland accounting firm saw little change in requests for proposals. According to our most recent survey, non-retail price growth increased slightly.\nThe summer tourism season finished on a high note, meeting resort managers' expectations. Moreover, hoteliers in Baltimore and western North Carolina said that conventions and autumn leaf viewing were expected to support strong bookings throughout October. A source on North Carolina's Outer Banks reported a number of scheduled autumn events to draw tourists for several more weeks. In addition, many rentals were already booked for Thanksgiving, Christmas, and New Year's. Few rate changes were reported.\nFinance\nReports on lending activity were mixed in recent weeks. Residential mortgage demand declined in West Virginia and southeastern Virginia but rose slightly in Maryland, North Carolina, and South Carolina. Refinance loan demand was mostly unchanged except in West Virginia and South Carolina, where demand declined. Business lending was unchanged on balance. A contact in Maryland remarked that small businesses were having difficulty getting credit while larger businesses had no problems. The level of lending in commercial and industrial real estate, which had been trending up, has flattened in the Carolinas and West Virginia. Bankers in several locations characterized competition as \"fierce.\" A lender from South Carolina reported some easing of standards; however, a contact from Maryland cited a tightening of underwriting standards. There were no reports of changes to credit quality. Lastly, slight upward pressure on loan interest rates was reported in West Virginia.\nReal Estate\nDistrict housing market activity grew at a somewhat slower pace since the previous report. Most brokers indicated that buyer traffic was steady, on a seasonally adjusted basis. Most Realtors reported a slight increase in home prices, although one South Carolina broker reported a small decrease in both single-family and condominium sale prices. A contact in the Hampton Roads region of Virginia stated that the number of condominium sales was only slightly higher; apartment rental activity remained steady. Inventory reports were mixed. Realtors in South Carolina, North Carolina, and Virginia saw seasonal declines in inventories, while District of Columbia and northern Virginia brokers reported steady or rising inventories. Days on the market varied by location. Average market times decreased for Realtors in Richmond, Charlotte, and Myrtle Beach, but contacts in the nation's capital and Greensboro reported no change; a northern Virginia Realtor noted a slight increase. Construction across the District increased slightly for custom homes. A South Carolina Realtor saw no new multifamily construction and a Virginia Beach broker stated that multifamily growth is slowing down because of overbuilding. In contrast, an agent in Asheville stated that multifamily construction has \"ramped up.\"\nCommercial real estate activity improved modestly over the past several weeks. A broker in Charlotte reported a gradual improvement in sales and leasing, with a moderately strong office market and modest activity in industrial and retail real estate. The office market in the Hampton Roads area of Virginia was mixed. A South Carolina source reported robust leasing in both office and retail, with a slower industrial market since the last report. Retail vacancy rates were lower in Baltimore and Virginia Beach, and unchanged in Charlotte and Richmond. Office vacancy rates varied across the District. A Charlotte broker reported increased industrial construction, along with a few speculative office projects. Multiple contacts noted rising commercial sales prices. Rental rates varied across regions and submarkets.\nAgriculture and Natural Resources\nCorn prices declined further over the past six weeks. Soybean prices also fell, while cotton prices were unchanged. A West Virginia farmer stated that grain prices declined after seven years of above-average prices. Farmers' input prices were unchanged in South Carolina and Virginia. A grower in South Carolina reported completion of corn harvesting and the start of peanut harvesting since the previous report. In West Virginia a farmer said that crop planting, reseeding, and harvesting were on schedule, and that his compost business had increased in the past six weeks.\nSince the previous report, coal production and prices decreased in southern West Virginia and rose in the northern part of the state, according to a source. Natural gas production increased moderately; more West Virginia wells were brought online, and natural gas prices decreased slightly.\nLabor Markets\nOn balance, demand for workers increased since the previous report. A textile and chemical manufacturer from Virginia reported new hiring, while a food producer transitioned several temporary employees into full-time positions. New hiring in tourism, manufacturing, and IT was noted in West Virginia; however, there were reports that WARN Act notices, indicating a planned mass layoff, had been issued in the coal industry. A central Virginia staffing agent noticed significantly stronger demand in recent weeks, especially for customer service, healthcare, and legal workers. A Maryland employment service provider said there were no notable changes in hiring, but suggested that the skills most in demand were for managers, supervisors, engineers, and IT professionals. Some transportation, banking and finance, hospitality, and retail industries continued to have difficulty finding workers. A few contacts reported wage pressures for drivers, construction workers, skilled engineers, managers, IT professionals, and bankers. According to our most recent surveys, manufacturing employment grew at a modest pace, the average workweek lengthened, and wages rose slightly; in the service sector, employment and wages increased at a moderate pace.\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 15, 2014\nThe Eleventh District economy grew at a moderate pace over the past six weeks. Manufacturers mostly reported increases in demand, and retail and automobile sales expanded at a pace in line with the prior report. Demand for nonfinancial services generally improved and real estate activity remained solid. The energy sector continued to grow, and agricultural conditions improved. Upward price pressures eased slightly and employment held steady or increased. Outlooks remained optimistic across the board.\nPrices\nMost responding firms said prices held steady over the last six weeks, with fewer reports of firms raising prices than in the previous report. Professional business services firms said rates were unchanged over the reporting period (though higher than a year ago), and retailers and auto dealers also noted steady prices. Changes in selling prices in the manufacturing sector were mixed. Prices for construction materials such as fabricated metals, concrete, brick, and glass rose, while prices for primary metals, transportation equipment, and high-tech products held steady and lumber prices fell slightly. Food producers continued to note selling price increases due to rising input costs. These contacts said selling prices will likely level out before raw materials prices do, and companies will try to cut costs elsewhere.\nThe price of West Texas Intermediate crude oil fell over the course of the reporting period, as global supply growth met softer international demand. The price of natural gas stabilized at just under $4 per MMbtu over the past six weeks after falling during the prior reporting period. Retail gasoline and diesel prices continued to fall.\nLabor Market\nEmployment at responding firms held steady or increased, and labor market tightness continued to be mentioned by numerous contacts. Reports of hiring came from staffing and transportation services firms and construction-related manufacturers (such as fabricated metal, cement, and brick producers). Legal firms noted a seasonal increase in headcounts from adding new fall associates. A retailer noted difficulty in hiring in the areas of the state where the energy sector was booming, and an auto dealer said they were losing mechanics and technicians to energy companies in the Eagle Ford region to repair oilfield trucks. A shortage of specialized heavy construction workers and chemical engineers was causing some delays in announced construction projects in the petrochemicals industry. Residential construction contacts also noted persistent labor shortages; one contact saw some easing while another said that in Houston, a few builders were placing cameras and armed guards at their construction sites to prevent poaching of workers. Energy contacts saw no relief from the tight labor market, especially in West Texas.\nSeveral contacts continued to report upward wage pressures. Staffing services firms said candidates were often receiving multiple offers, which caused some firms to increase wages to stay competitive. Some primary and fabricated metals manufacturers noted higher wages; increases as high as 30 percent over the last six months were seen in some trades, according to contacts. High-tech manufacturers said wage pressures remained elevated for some higher-skilled workers.\nManufacturing\nMost manufacturers noted an increase in demand since the previous report and outlooks were largely positive. Primary metals producers said demand grew but at a slower pace, possibly due to seasonal factors. Demand for fabricated metals strengthened and was up notably from last year, with contacts pointing to increased demand from a number of segments of the construction industry. Demand was mostly flat for lumber, cement, glass, and brick manufacturers, although a couple of contacts noted a pickup in demand for these products in the Dallas area.\nContacts in high-tech manufacturing reported demand was stable or higher over the past six weeks. Respondents expect strong demand growth for the next three to six months, primarily due to expansion in capacity by cloud and mobile computing providers. Food producers said demand increased somewhat over the reporting period, mostly due to seasonal factors, but was largely unchanged from a year ago.\nPetrochemical producers reported slightly lower production as various repairs and upgrades to existing facilities had fallen behind schedule. Firms in this sector noted some delays in announced construction projects because of worker and materials shortages as well as delays in securing permits. Refinery utilization rates along the Gulf Coast were strong, and outlooks through year-end remained positive among refiners and chemical producers.\nRetail Sales\nRetail sales increased at about the same pace as during the prior reporting period. A continued boost from back-to-school shopping was the most-noted driver of recent sales growth, and demand was also up year-over-year. Contacts' outlooks for the remainder of the year were optimistic, and they expect demand during the holiday shopping season to be slightly stronger this year than in 2013.\nAutomobile sales continued to increase, at a pace similar to the prior reporting period. Demand was up year-over-year. Contacts were satisfied with inventory levels and said they had plenty of vehicles. Outlooks for the rest of the year were positive, although one contact noted that an increase in interest rates could drastically change the landscape of their industry.\nNonfinancial Services\nMost nonfinancial services firms reported demand was up from six weeks ago, and outlooks were optimistic. Staffing firms generally noted demand increases, with one contact saying the past two weeks were the company's strongest all year. Contacts said all skill levels were in high demand, and that demand for low-skilled workers had increased. Direct hiring led demand growth, although one contact said contract and temporary worker demand will likely increase as the Affordable Care Act's effects continue to be felt. The accounting sector continued to operate at high levels of activity and demand for these services increased further over the reporting period. Demand for legal services increased as well, with particular strength coming from corporate work.\nTransportation services firms said overall cargo volumes increased slightly since the previous report. Small-parcel cargo volumes increased, with retail trade (led by e-commerce) remaining the strongest source of growth. Railroad contacts noted a rise in petroleum and motor vehicle shipments. Air cargo volumes continued to trend upward as increased international air cargo demand outpaced a decline in domestic demand. Outlooks were cautiously optimistic.\nAirlines reported passenger demand fell over the reporting period due to seasonal factors, but was up from a year ago. Domestic demand remained stronger than international demand.\nConstruction and Real Estate\nThe District's housing sector remained solid overall. Single-family home sales were flat to down over the reporting period. Land prices continued to trend upward at the same pace; however, the pace of home price appreciation slowed, with one respondent noting a slight pushback in pricing from buyers. Contacts said a few homebuilders were expanding production of more-affordable high-density housing. Robust apartment demand kept occupancy high and rent growth solid despite elevated levels of multifamily construction activity. Single- and multifamily housing contacts were optimistic in their near-term outlooks.\nOffice leasing activity increased in Dallas and Austin and held steady at high levels in Houston. Contacts noted moderate growth in rents. Demand for industrial space remained strong and vacancy rates remained tight in most major metro areas. Construction activity stayed elevated, and outlooks were mostly optimistic.\nFinancial Services\nDemand for loans accelerated slightly since the last report. Financing for mergers and acquisitions as well as capital expenditures rose in recent weeks. Lending to medium-sized businesses continued to grow, and financing activity for commercial real estate development remained robust. Mortgage lending grew slightly, but contacts noted that a low supply of housing was constraining growth. Contacts noted increased optimism among clients.\nEnergy\nDemand for oilfield services in the District continued to grow, although activity in the Permian Basin in September was muted temporarily by flooding. Growth in Texas drilling activity was again concentrated outside of the major basins. Outlooks for the rest of the year remained optimistic and were largely unchanged from the prior reporting period.\nAgriculture\nDistrict drought conditions eased slightly over the past six weeks, although more than half of Texas remained in a drought that has plagued the state since the end of 2010. Harvesting of row crops like cotton and corn continued, and crop conditions were slightly better than last year. Cattle prices continued to be at a record high while feed prices fell, boosting profitability for cattle producers. Domestic and export beef demand remained strong despite retail beef prices reaching a record high in August. Improved moisture conditions overall have increased optimism for winter crops and expanded prospects for cattle herd rebuilding.\nWe serve the public by pursuing a growing economy and stable financial system that work for all of us.\n"