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Reports from contacts in the Eighth District have been mixed since our previous survey. Manufacturing activity has continued to increase, while reports of activity in the services sector have been mixed. Residential real estate market activity has continued to decline, while commercial real estate market conditions varied across the District. Lending at a sample of small and mid-sized District banks declined slightly during the three-month period from mid-June to mid-September.
Manufacturing and Other Business Activity
Manufacturing activity has continued to increase since our previous report. Several manufacturers reported plans to open plants and expand operations in the near future, while a smaller number of contacts reported plans to close plants or reduce operations. Firms in the automobile, railroad rolling stock, ceramic product, automobile parts, sanitary paper product, and appliance manufacturing industries reported plans to expand operations and hire new workers. In contrast, firms in the ammunition, primary metal, and wood manufacturing industries announced plans to lay off employees.
Reports of activity in the District's services sector have been mixed since our previous survey. Firms in business support services, casinos, leisure, and health services industries announced plans to expand operations and hire new workers. In contrast, contacts in social services, media monitoring services, telecommunications, and education services industries announced plans to decrease operations in the District and lay off employees. General retailers noted that sales have been flat to slightly down and they anticipate that consumers will continue to cut back on their purchases through the end of the year. Auto dealers noted that sales increased during the reporting period but they anticipate that sales for the remainder of the year will be soft.
Real Estate and Construction
Home sales continued to decline throughout most of the Eighth District. Compared with the same period in 2010, August 2011 year-to-date home sales were down 6 percent in Memphis, 9 percent in St. Louis, 10 percent in Louisville, and 12 percent in Little Rock. Residential construction also continued to decrease throughout the District. August 2011 year-to-date single-family housing permits decreased in the majority of the District metro areas compared with the same period in 2010. Permits decreased 12 percent in Memphis, 19 percent in Louisville, and 24 percent in Little Rock and St. Louis.
Reports of commercial construction activity were mixed throughout the District. Contacts in northeast Arkansas reported that Jonesboro and Paragould are experiencing an increase in commercial construction activity. In contrast, contacts in St. Louis reported that commercial construction activity is weak and is expected to remain slow for the remainder of the year. Reports of industrial construction activity also varied across the District. Contacts in west Tennessee reported that various medical-related establishments have either completed construction projects or announced new ones. In contrast, contacts in St. Louis and Louisville reported that speculative industrial construction activity is expected to remain slow.
Banking and Finance
Total loans outstanding at a sample of small and mid-sized District banks decreased 0.8 percent in the three-month period from mid-June to mid-September. Real estate lending, which accounts for 73.7 percent of total loans, decreased 1.5 percent. Commercial and industrial loans, accounting for 15.7 percent of total loans, decreased 0.5 percent. Loans to individuals, accounting for 4.9 percent of loans, increased 2.1 percent. All other loans increased 6.3 percent and accounted for 5.7 percent of total loans. Over this period, total deposits increased 0.1 percent.
Agriculture and Natural Resources
The rates of completion for the cotton, soybean, and rice harvests in the District states were behind their 5-year average. In contrast, the corn harvest was at least 5 percent ahead of schedule in the majority of the District's states. The fraction of corn, soybean and sorghum crops rated in fair or better condition declined by at least one percent in most states since the previous report. The fraction of pastures in fair or better condition increased or remained unchanged in most states, except Illinois and Missouri. The District's monthly coal production for August 2011 was 0.3 percent lower compared with August 2010; however, the District's year-to-date coal production for August 2011 was 3.5 percent higher than the same period in 2010.