The Federal Reserve Board eagle logo links to home page

Beige Book logo links to Beige Book home page for year currently displayed June 14, 2000

Federal Reserve Districts

Sixth District - Atlanta

Skip to content

New York
St. Louis
Kansas City
San Francisco

Full report

Southeastern economic activity expanded moderately, and contacts are mostly optimistic about future prospects. Retail sales during April and May exceeded year-ago levels but growth has weakened. Evidence of a slowdown in the District's single-family residential market is mounting; however, commercial real estate markets remain strong. Overall, loan demand has weakened slightly in the Southeast. Reports from both the industrial and tourism sectors are mostly positive. Tight labor markets continue to constrain growth in the District, and reports concerning prices are mixed.

Consumer Spending
According to District retailers, sales in April and May exceeded year-ago levels, though growth weakened somewhat in May. A majority of merchants said that recent sales had met expectations and inventories were generally balanced. However, many retailers contacted noted a slowdown in recent activity and anticipate that second-quarter growth will be modest. Women's apparel, electronics and jewelry are selling well, while men's apparel sales continue to be weak.

The District's single-family residential market is showing more signs of a slowdown. More contacts than in our previous report observe that activity has weakened. Both Realtors and builders believe that the market will continue to decelerate through the remainder of the year. In most cases, the rise in interest rates is credited with slowing demand, while the lack of suitable lots, particularly in Georgia and Florida, is a major restraining factor as well. Most District Realtors contacted report that home sales in April and May were equal to or below year-ago levels. Additionally, contacts indicate that home-price increases are slowing, and there is evidence that concessions are on the rise, as are customer negotiations.

In contrast to residential real estate markets, the region's commercial real estate markets remain strong. Occupancies are described as healthy, while absorption continues strong. Office space is scarce in several key markets. Speculative office development continues in several parts of the District. Industrial markets remain tight around the District and new projects continue to be announced. Retail growth is substantial. Overall, the picture is rosy; however, contacts approach the future with some caution.

Reports from the industrial sector are mostly positive. Growth in the region's auto industry is stimulating production of parts and components. A Tennessee manufacturer of transmissions is adding jobs in an expansion project. In Georgia, a supplier of steering wheels and dashboard components is ramping up production and adding to employment rolls to supply Alabama's new Honda plant.

Louisiana's oil industry is reportedly "heating up," but smaller drilling companies are having trouble getting rigs running because of a lack of labor crews. Most of the increased activity is associated with increased pumping and utilization of existing wells, rather than on new explorations. In the manufacturing sector, the outlook continues to be positive. Orders and the factory workweek are up for a producer of commercial and industrial machinery, and orders are robust for a high-tech producer of television set-top boxes. A developer of fiber-optics technology is expanding employment rolls. Less positively, production is down for a Georgia apparel producer, and a Mississippi glove manufacturer is shutting down operations.

Tourism and Business Travel
Prospects for the tourism and hospitality sector remain very positive. Summer bookings for south Florida hotel/motel rooms suggest a record-summer season. Miami posted the highest occupancy rates and the third highest room rates in the nation for the first quarter. Higher gas prices do not appear to have had any measurable effect on south Florida tourism, and consumers reportedly are not expected to change their summer travel habits as a result of the higher prices. Mississippi Gulf Coast casinos continue to produce record-breaking revenues. This is reflected in the growth in the number of hotel rooms and increase in flights at the Gulfport-Biloxi airport.

Bankers report that overall Sixth District loan demand has weakened slightly. The softness in the refinancing sector has been mitigated somewhat by reports of strong activity on the consumer side in home-equity lending. Demand for commercial and industrial loans was reported to have slowed recently. Some financial institutions have tightened terms on commercial and consumer loans, while relaxing them in the residential mortgage market. Consumer loan demand continues to be robust, while deposit growth slowed and residential mortgage lending remains down.

Wages and Prices
Tight labor markets continue to burden the District. Nursing and IT employees are in especially high demand. One fast growing Internet company says that its average cost for new employees is up by 15-20 percent more than budgeted a year ago. A temporary employment agency reports that search times for candidates have increased so dramatically that they expect a significant near-term escalation of wages. After holding wages steady for several years, some Alabama employers are feeling pressure to raise wages 5-8 percent. The pool for "qualified candidates" is shrinking, according to the manager of a large Georgia mall, and a spokesman for theme parks in central Florida foresees difficulties in filling thousands of summer job openings. More reports than last time indicate that companies are using productivity-based cash incentives and are increasing benefits.

Most contacts report no significant change in prices since the last Beige Book, while there are some reports that are up or mixed. Copper and oil prices are reportedly down from recent highs, but there has been a recent upward movement in paper products, meats, grains, and vegetables. One contact indicates further escalation in building materials prices. Prescription drug prices are surging, according to reports, with increases as high as 35 percent.

Return to topReturn to top

Previous Richmond Chicago Next

Home | Monetary Policy | 2000 calendar
To comment on this site, please fill out our feedback form.
Last update: June 14, 2000