WASHINGTON (MNI) ? The following is the Federal Reserve Beige
Book?s latest Eighth District economic assessment, published Wednesday:
Summary
The economy of the Eighth District continued to grow at a modest
pace since our previous survey. Residential real estate market
conditions have improved moderately. Similarly, commercial real estate
market conditions also have improved. However, recent reports of plans
from firms in the manufacturing and services sectors were more mixed.
Overall lending at a sample of small and medium-sized District banks was
essentially unchanged during the three-month period from mid-December to
mid-March.
Manufacturing and Other Business Activity
Reports of plans for manufacturing activity have been mixed since
our previous report. Several manufacturers announced plans to increase
operations and hire workers, while a similar number of contacts reported
plans to close plants and lay off workers in the near future. Firms in
the pipe, bathroom products, all-terrain vehicle, construction
machinery, processed poultry, and power tool manufacturing industries
announced plans to increase existing operations or open new plants in
the District. In contrast, firms in the oil blending and packaging and
fish farming industries announced plans to close plants and lay off
workers. In addition, a major firm in the printing industry announced
plans to close a plant in the District and lay off a large number of
workers.
Reports of planned activity in the District?s services sector also
have been mixed since our previous survey. Firms in hotel, business
support, distribution, and natural gas distribution services announced
plans to expand operations and hire new workers. In contrast, contacts
in health care, distribution, freight transportation, casino, and
storage services announced plans to close facilities and lay off
workers. General retail contacts have reported strong sales for the
first two months of the year, and they expect positive sales growth to
continue through 2012. District auto dealers have reported strong demand
in the luxury automobile market while truck sales have been down.
Real Estate and Construction
Home sales increased throughout most of the Eighth District on a
year-over-year basis. Compared with the same period in 2011, February
2012 year-to-date home sales were up 10 percent in Memphis, 24 percent
in St. Louis, 19 percent in Louisville, and 14 percent in Little Rock.
Residential construction increased in the majority of the District over
this time period. February 2012 year-to-date single-family housing
permits increased in the majority of the District metro areas compared
with the same period in 2011. Permits increased 22 percent in Memphis,
63 percent in Louisville, 28 percent in Little Rock, and 25 percent in
St. Louis.
Commercial and industrial real estate conditions improved
moderately throughout most of the District. Contacts in northeast
Arkansas continued to report strong commercial real estate activity in
the Jonesboro area. A contact in Little Rock noted stronger commercial
real estate activity for office and retail space than last year.
Contacts in the Louisville metropolitan area reported improvement in
office real estate activity and expect increases in the demand for
industrial space. However, a contact in central Kentucky noted that
commercial real estate activity is very soft. Commercial and industrial
construction activity showed modest improvement in several parts of the
District. A contact in Little Rock reported that new construction
activity has improved because of the mild winter weather, but it is
still at weak levels. Contacts in central Arkansas reported increased
bidding in commercial construction projects, while a contact in western
Kentucky noted large commercial and industrial construction projects to
be completed in Owensboro.
Banking and Finance
Total loans outstanding at a sample of small and medium-sized
District banks were essentially unchanged in the three-month period from
mid-December to mid-March. Real estate lending, which accounts for 73.7
percent of total loans, decreased 0.4 percent. Commercial and industrial
loans, accounting for 15.8 percent of total loans, grew 2.2 percent.
Loans to individuals, accounting for 4.7 percent of loans, decreased 1.3
percent. All other loans decreased 8.8 percent and accounted for 5.8
percent of total loans. Over this period, total deposits increased 1.9
percent.
Agriculture and Natural Resources
Monthly output of commercial red meat in the District for February
2012 increased 9.9 percent compared with February 2011. However, monthly
output of commercial red meat declined 4.4 percent between January and
February 2012. The number of chickens slaughtered and the total live
weight also decreased by 4 to 5 percent between January and February
2012. The District?s year-to-date coal production for early March was
3.5 percent lower compared with the same period last year. Similarly,
the Districts coal production for February was 2.4 percent lower than
in February 2011
** MNI Washington Bureau: 202-371-2121 **
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