October 21, 2009
Federal Reserve Districts
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On balance, information from Sixth District business contacts suggested that economic activity pulled back somewhat in September. Retail and tourism-related spending was below expectations according to most contacts, while automobile dealers reported that sales had dropped following the expiration of the "cash for-clunkers" program. Reports from real estate contacts indicated that home sales continued to improve in most areas, although the pace of the improvement slowed somewhat in September. Commercial real estate conditions deteriorated further as vacancy rates rose, rents declined, and more planned commercial projects were delayed or cancelled. A small majority of manufacturer contacts noted a modest decline in production and orders in September. Most contacts in the banking sector reported that credit conditions remained tight. The pace of layoffs in the District continued to slow, but most contacts also indicated that they were not looking to hire in the near term. Overall, inflationary pressures remained subdued, with most contacts noting that input and output prices were flat to down slightly over the month.
Consumer Spending and Tourism
Tourism-related spending in the District remained weak in September. Industry contacts reported that hotel reservations, particularly related to conventions, were down. Room rates continued to decline, as well, in most locations. Cruise-line occupancy rates remained solid. However, this was attributed to very deep discounting. Hospitality industry contacts expect subdued activity to persist over the next few months.
Real Estate and Construction
Private-sector commercial real estate activity weakened further in September. Vacancy rates continued to rise across all segments, and contacts continued to cite downward pressure on rents. Developers reported fewer backlogs, and more projects were delayed or cancelled. The outlook among contractors remained unchanged since last reported, with most anticipating activity to continue to decline into 2010. However, contractors in some parts of the District noted that federal stimulus monies were starting to help spur some public-sector activity.
Manufacturing and Transportation
Overall, transportation activity remained weak, with rail shipments of automobiles being one of the few areas showing improvement. Weak demand and lower prices were noted as adversely impacting revenues for several regional trucking companies.
Banking and Finance
Employment and Prices
Construction and manufacturing firms reported that several raw material prices continued to moderate. Real estate contacts noted some further downward pressure on rents. Once again, most retailers remarked that retail prices remained stable relative to year-earlier levels.
Natural Resources and Agriculture
Unusually high rainfall amounts were reported in most parts of the District. Floods damaged some of North Georgia's nurseries, vegetable farms, and commercial vineyards. However, Florida citrus growers benefited from recent rainfall. Crop conditions were described as generally favorable for cotton, soybeans, and peanuts in Alabama, Georgia, and Mississippi.