June 10, 2009
Federal Reserve Districts
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Sixth District business contacts reported that economic activity continued to contract in late April and May, although the pace of decline had moderated in some industries and most noted that their outlook had improved. Information from retailers was consistent with sluggish consumer spending, but sales were largely in line with modest expectations. Most auto dealers noted further declines in sales, while tourism-related spending slowed further in late spring. Real estate contacts suggested that ongoing weakness in home sales had moderated in several areas and inventories of unsold single-family homes were trending down. However, most commercial construction reports remained negative as vacancy rates continued to rise. Fewer manufacturers cited reduced production and orders than in the previous report, although overall activity remained quite weak. Banking contacts remarked that general business and consumer loan demand was soft. Labor market conditions continued to be weak, although fewer firms reported layoffs than earlier in the year. Price pressures remained relatively stable throughout the District.
Consumer Spending and Tourism
Tourism-related spending weakened according to several contacts. Although theme park attendance and cruise bookings were relatively stable, promotions and discounting were acknowledged as playing a significant role. Overall, vacationers were said to be spending less. In addition, inbound international travel continued to trend down from a year earlier, while business-related travel and convention attendance also declined.
Real Estate and Construction
Commercial real estate activity remained weak. Vacancy rates continued to rise in many parts of the District, putting downward pressure on rents, most notably in the retail sector. Contractors reported more projects being postponed or cancelled. Commercial real estate contacts anticipate more space will become vacant in the coming months and that construction will continue to slow.
Manufacturing and Transportation
District transportation contacts reported ongoing weakness in freight activity through mid-May compared with a year earlier. Auto, chemical, and construction-related rail shipments declined further. Trucking contacts servicing the retail industry noted much lower tonnage than a year earlier.
Banking and Finance
Employment and Prices
Homebuilders and manufacturing firms continued to report that prices paid for both raw materials and imported finished goods were below year-earlier levels. Retailers noted a reduction in price discounting compared to previous months, and a majority of merchants reported that selling prices were generally on par with a year earlier.
Natural Resources and Agriculture
Above normal rainfall soaked most District farm areas. District growers experienced a pickup in prices and are hoping for a continued rebound in the coming months.