July 25, 2007
Federal Reserve Districts
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The Second District's economy has continued to expand at a moderate pace since the last report, while price pressures have been stable. The labor market has remained steady and strong, and both manufacturing and other firms anticipate a modest increase in their employment levels, on balance, in the second half of the year. Tourism has shown signs of strengthening. Retailers indicate that sales were on or slightly below plan in June and early July, while selling prices have been steady to up modestly; consumer confidence in the region fell moderately in June and for the quarter overall.
Manufacturers report increasingly widespread growth in activity in June and early July, while they indicate that price pressures, though still fairly pronounced, have not intensified. Housing markets have been mixed since the last report, with New York City's market showing relative strength. Office markets in the New York City area showed signs of tightening. Finally, bankers report some slippage in loan demand--particularly on residential and commercial mortgages; they also note further tightening in credit standards, and a slight increase in delinquency rates on consumer and home mortgage loans.
The Conference Board's survey of Middle Atlantic residents showed confidence retreating further in June, slipping to its lowest level in almost a year. Siena College's surveys of New York State residents indicate that confidence slipped throughout the state in the second quarter, with the steepest declines in the Albany and Binghamton areas. Tourism activity in New York City has been robust since the last report. Manhattan hotels remained at close to full capacity in May and June, while room rates and total revenues continued to run roughly 15 percent higher than a year ago. Broadway theaters report that both attendance and revenues picked up noticeably in June and early July, running close to 10 percent above year-ago levels.
Construction and Real Estate
Housing markets have been mixed but generally stable since the last report, with New York City continuing to show more strength than the rest of the region. Manhattan's co-op and condo market remained brisk in the second quarter: sales activity picked up further, with the number of transactions more than doubling from a year earlier, though prices have flattened out. The listing inventory is reported to have retreated fairly sharply from the exceptionally high levels of a year ago. A major regional rental management firm reports strong rental rate increases in southwestern Connecticut, and moderate gains in the Albany area, but flat rents across the Hudson Valley and the Buffalo area. Finally, New Jersey home-builders report ongoing weakness in new home prices; they also note that residential development activity has slowed further, particularly for age-restricted communities, and along the "Gold Coast"--communities along the Hudson River across from New York City.
Other Business Activity
Similarly, non-manufacturing contacts in the district report continued moderate expansion in general business activity, increased optimism about the general business outlook, and prevalent planned increases in capital spending. Business contacts also indicate a recent pickup in hiring activity and, on average, expect to expand employment levels a bit more in the second half of the year than in the first half. Separately, a major New York City employment agency specializing in mid-level office jobs reports that the labor market has been steady and strong since the last report; hiring activity has continued at a brisk pace and companies continue to report difficulties filling jobs.