September 7, 2011
Federal Reserve Districts
|Skip to content
Sixth District business contacts indicated that economic activity continued to expand at a very subdued pace in July and August. Retail sales grew more slowly than during the previous reporting period, although tourism activity remained solid. Existing home sales improved in Florida, but were weak elsewhere in the District. New home sales and construction were soft and downward pressure on prices persisted for both existing and new homes. Contractors reported low levels of commercial development. Manufacturing contacts indicated that the level of production and new orders increased, but at a slower pace than experienced earlier in the year. Bankers noted ongoing weakness in loan demand as both consumers and businesses were restrained in their borrowing activity. Most businesses continued to be cautious regarding adding permanent staff, with several indicating that they had chosen to hire temporary or contract workers to fill immediate labor needs. Contacts reported that on average, sales prices were up slightly from a year ago, although some retailers mentioned that weak sales were prompting them to lower prices. Energy contacts indicated plans to increase oil production capacity.
Consumer Spending and Tourism
Tourism activity remained robust in the District. Hospitality industry reports cited increases in occupancy and room rates. Airport traffic was up, particularly in South Florida, which serves as a point of entry for cruise line travel as well as international travel from Latin America. Although some companies noted that the softer economic climate has led to a decline in advance bookings from business travelers, the overall outlook among contacts remained strong for the coming months.
Real Estate and Construction
District builders reported that new home sales and construction activity were similar to year earlier levels. New home inventory levels declined somewhat, but builders noted downward pressure on new home prices nonetheless. Residential contractors indicated that home improvement construction improved from earlier in the year. Compared with the June report, builders' outlook weakened somewhat with the majority of contacts expecting new home sales growth to be flat over the next several months and construction to be similar to last year's weak levels.
Commercial contractors signaled that nonresidential construction was slow, although activity in the healthcare sector continued to be positive. Contacts reported aggressive bidding by contractors and subcontractors. On the leasing side, firms noted that the absorption of space had slowed somewhat in recent weeks. Overall, the outlook for construction and leasing activity weakened somewhat from previous months.
Manufacturing and Transportation
Railway firms cited increased capital expenditures, above-trend plans to hire, and strengthening exports--particularly coal. Trucking contacts expressed continued labor supply issues and elevated fuel costs, and have also projected demand for the remainder of the year to be somewhat softer than previously anticipated.
Banking and Finance
Employment and Prices
Pricing information was mixed. Contacts reported that on average, sales prices were up slightly from a year ago, although some retailers mentioned that weak sales were prompting them to lower prices. Fewer manufacturers reported higher input prices than in previous months. Firms noted that they continued to face cost pressures, particularly from high materials and freight costs.
Natural Resources and Agriculture
While most of the District continued to experience varying degrees of drought conditions, recent rains have provided relief to some of the region's stressed pastures and crops. Cotton prices were up compared with last year but have fallen from record highs. Peanut producers expect prices to increase as supply from areas outside of the District becomes constrained as a result of adverse weather.