April 13, 2011
Federal Reserve Districts
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The Second District's economy has strengthened further since the last report. Firms in various industries report widespread increases in input prices and some increases in selling prices, while retail prices are generally reported to be stable. Labor market conditions improved moderately, with increased hiring reported in a number of industries. Retail sales were robust in February and March, with particular strength in auto sales. Consumer confidence has been mixed but generally steady since the last report. Tourism activity rebounded somewhat in March, after weakening modestly in February. Commercial real estate markets have been mixed. Housing markets have been generally stable, with relative strength at the lower end of the market. Finally, bankers report some weakening in household loan demand, and a moderate increase in delinquencies on commercial and industrial loans.
Auto dealers in upstate New York--metropolitan Rochester and Buffalo--characterize sales of new vehicles as exceptionally strong since the last report. Sales of used cars were also relatively robust, and dealers report that business at service departments remains brisk. Retail credit conditions continued to improve.
Confidence surveys have given mixed results since the last report. Siena College's survey of New York State residents shows consumer confidence among NY State residents leveling off in March, after falling in February. The Conference Board reports that residents of the Middle Atlantic states (NY, NJ, Pa) became considerably less confident about the near-term outlook, in March, but that their assessment of current conditions improved for the 4th straight month.
Tourism activity in New York City picked up again in March, after slowing somewhat in February. Occupancy rates at Manhattan hotels moved up noticeably in March, and the number of occupied rooms was up modestly from a year earlier. Hotel revenues, which had slipped below comparable 2010 levels in February, rebounded in March. Attendance and revenues at Broadway theaters also slipped in February but rebounded above year-earlier levels in March.
Construction and Real Estate
Activity in New York City's co-op and condo market was generally stable in the first quarter, though the high end of the market has slowed a bit. While total activity was relatively flat versus a year ago, co-op sales rose sharply, while condo sales fell sharply. New condo units represent a smaller proportion of total apartment sales than they have in recent years. Overall, listing inventory is down roughly 5 percent from a year ago. Prices are steady in Manhattan, but continue to drift down in the other boroughs. Manhattan's apartment rental market has picked up somewhat since the last report. Overall, rents were reported to be little changed in March, but rents on smaller (studio) apartments continued to climb and were up more than 10 percent from a year ago. Vacancy rates declined, after edging up in January and February, and the inventory of available units is described as tight.
Office markets have been mixed but generally steady across the District in the first quarter of 2011. The office vacancy rate rose moderately in Manhattan and Long Island (where it reached a multi-year high), but was little changed in Northern NJ. However, asking rents in all these areas moved up, and landlords reportedly scaled back on concessions. In the Buffalo, Rochester and Syracuse areas, vacancy rates edged down, while asking rents were steady to up moderately. In Westchester and Fairfield counties and metropolitan Albany, however, office markets showed further signs of softening, as vacancy rates rose and asking rents continued to decline modestly.
Other Business Activity