|Skip to content
Contacts around the Sixth District suggest that economic
activity continues its moderate rate of growth on net, with signs of slowing apparent in
some sectors. Retail sales continued to exceed year-ago levels in both October and early
November, although retailers noted weaker sales in the latter period. District
manufacturers indicate that production has recently weakened slightly, while their outlook
has improved somewhat. Reports on tourism within the region remain overwhelmingly
positive. Real estate contacts report that home sales and construction activity slowed in
October. However, the single-family market continues to operate at a healthy level, and
commercial real estate markets continue to improve throughout the District, with falling
vacancy rates and robust levels of construction in many areas. Overall loan demand is
characterized as moderate. Labor shortages persist in many areas of the District, but wage
pressures reportedly remain subdued.
According to District retailers, sales in October and
early November exceeded year-ago levels. Sales increases were stronger in October than
in early November on a year-over-year basis. More than half of the retailers contacted
said that recent sales had met their expectations, and most retailers report that inventories
are on target. Apparel, cosmetics, shoes, and home-related products are among the top
sellers within the region. Looking toward holiday sales, most retailers anticipate a slight
increase over last year, while the remainder expect a more significant increase.
Since the last Beige Book, an increasing number of
factories are reporting decreasing production and shipments. However, more reported
expectations for improved future business activity, and most manufacturers expect to
maintain current employment levels for at least the next few months. Contacts in the
food, paper, and lumber and wood industries report slowing activity. Although weakness
persists for the region’s apparel producers, one contact says that there have been fewer
reports of shrinking employment rolls in the industry, perhaps indicating that a large
portion of weaker firms have been culled out. More positively, orders for industrial
machinery and electronic equipment have recently picked up at regional plants, and some
Louisiana chemical plants are reportedly running at 100 percent capacity and are
announcing expansions. Recently announced additions to Tennessee’s automotive
industry are expected to further industrial growth in the state.
Tourism and Business Travel
New attractions, expanded airline service,
and strong international traffic are resulting in filled theme parks and high hotel
occupancies in central Florida. Resorts on Florida’s Gulf Coast and in south Florida
report strong winter bookings, and spokesmen are confident that the trend will carry over
into next year. Recently renovated hotels and recognition of the trendy South Beach area
are boosting tourism to the southern part of the state; European and South American
tourism is up from a year ago in Miami. Strong 1997 booking numbers show that
Atlanta’s convention business will bounce back from a pre-Olympic slowdown. Although
the end of the year is traditionally slow for the Gulf Coast’s casino business, spokesmen
expect 1997 to usher in the fruits of large construction projects and new jet services.
According to real estate contacts, the single-family housing
market slowed in October from the previous month. On a year-over-year basis, home
sales were mixed within the District in both October and early November, while
construction was generally characterized as flat. Despite the overall slowdown in the
market, home sales and construction remain relatively high. Inventories of new and
existing homes are said to be adequate for expected sales throughout most of the District.
Most builders anticipate no change in the level of construction through the end of the
year, while Realtors’ expectations are more mixed.
Contacts from across the District generally report that commercial real
estate markets continue to improve. Declining vacancy rates and higher rental rates
continue to propel new industrial, office, and retail development. Although most
commercial projects continue to be build-to-suits, several speculative projects are
underway, and more are anticipated this year and next. Overall, the multifamily sector
remains healthy; however, some markets have weakened.
Most contacts in the banking industry report a moderate level
of loan demand. Consumer lending remains subdued with some strength in automobile
financing reported. Commercial lending remains mixed throughout the District.
Mortgage lending is said to be flat. There are also continuing reports of some softness
in loan quality.
Wages and Prices
Reports of increasing wages are infrequent in the
region at this time. However, reports of labor shortages in parts of the District remain
common. Workers from overseas are being recruited and imported into some parts of the
region to fill job vacancies. Craftsmen are in especially short supply. Contacts continue
to report that strong demand for management talent is being met with benefits and fringes instead of
higher salaries. Materials prices have increased slightly recently and are expected to
continue to escalate moderately, but most contacts expect prices received for finished
products to weaken or be unchanged over the next few months.