March 3, 2010
Federal Reserve Districts
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Reports from business contacts during January and the early part of February painted a mixed picture of economic activity for the Sixth District. While most retail contacts noted a larger than expected post-holiday decrease in traffic and sales, tourism-related spending appeared to have increased as a result of several high profile events. Residential real estate contacts indicated that both new and existing home sales softened, but generally remained above weak levels from a year ago. Commercial contractors continued to describe activity as weak. District manufacturers noted an improvement in new orders and the decline in production slowed. Banking contacts continued to note weakness in loan demand. Overall, businesses reported that labor demand remained subdued. However, temporary help agencies have noted a steady increase in job orders since the beginning of the year. Some manufacturing contacts reported an increase in input prices, but retail contacts suggested that they had very little pricing power.
Consumer Spending and Tourism
Tourism-related spending strengthened throughout the District. Miami, in particular, experienced strong demand for hotel bookings related to the Pro Bowl and the Super Bowl. Mardi Gras, which took place in mid-February in New Orleans, is estimated to have had the highest number of attendees since 2005. Cruise industry sources noted that onboard spending increased in early 2010. The overall outlook among hospitality contacts improved since the last report.
Real Estate and Construction
Reports from Realtors also indicated that existing home sales growth softened during January. Some noted that weather had been a deterrent to sales. Realtors indicated that high-end home sales growth remained weak but continued to improve, while low to mid-priced home sales growth softened. On a year-over-year basis, existing home inventories were mixed; however, reports indicated that unsold inventory increased from December. Most contacts continued to report year-over-year declines in home prices and more than half reported that prices had declined from December. The outlook remains positive but softened somewhat from December.
Commercial construction across the District remained at low levels during the reporting period. Most contractors reported that activity was even with fourth quarter 2009, while a few reported continued weakness. A little more than half said that backlogs were similar to fourth-quarter levels but were below year-ago levels. Most reported that demand for new construction remained very weak. Looking ahead, the majority of contacts anticipate commercial construction activity for the remainder of the year to be largely flat.
Manufacturing and Transportation
Transportation contacts reported that freight demand modestly improved in early 2010. Regional rail loadings in January and early February were above year-ago levels, with autos, chemicals, metals, and some construction-related shipments posting noticeable gains.
Banking and Finance
Employment and Prices
District manufacturing contacts indicated that input prices were up compared with a year ago, citing rising commodity prices as a primary factor. District retailers indicated that they had little pricing power and were wary of trying to pass input price increases through to consumers.
Natural Resources and Agriculture