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Business contacts reported that the pace of economic activity increased in
October and early November. Hurricane-related disruptions have subsided outside
of the worst affected areas, and rebuilding efforts have boosted activity in
several building related industries. Passenger vehicle sales continued to lag,
whereas other retailers reported modest improvements in sales and most expressed
cautious optimism toward the holiday season. By most accounts, housing markets
remained strong and the nonresidential segment displayed small improvements.
Manufacturing reports were quite positive, and the demand for transportation
services was strong. However, several Gulf of Mexico oil and gas pipelines remained
off-line because of storm damage. The tourism and hospitality sector reports
were mixed, varying by their location relative to the path of the hurricanes.
The demand for construction workers was very strong in the storm-affected areas,
and additional hiring was noted in manufacturing industries supplying building
materials. Higher prices were reported for building materials, energy, and some
food produce, the latter pushed up because of storm damage to several Florida
crops.
Consumer Spending
Most District retailers indicated that October and early November sales rose
modestly compared with last year and were in-line with expectations. Most merchants
were cautiously optimistic heading into the holiday season. The strongest sales
reports came from specialty non-discount stores. Retailers in the worst storm
affected areas reported poor sales outside of building supplies and groceries.
Automobile sales continued to be lackluster and several industry contacts reported
lower than expected sales of some SUV segments.
Real Estate
Contacts reported that District housing markets remained generally strong in
October and early November. However, existing home sales were described as having
moderated in some markets outside of Florida. Recovery from storm damage continued
to dominate building activity in parts of Florida and in South Alabama. Building
supplies and labor remained scarce in these areas. Some Realtors in Florida
reported strong demand for housing even in some of the hurricane-damaged areas.
Nonresidential market contacts continued to report modest improvements in vacancy
rates, whereas nonresidential construction remained muted.
Manufacturing and Transportation
Reports from the factory sector were mostly positive, boosted by increased regional
demand for building materials. Several contacts reported longer work hours and
additional hiring at building material suppliers. In some cases, plants were
operating at capacity. Defense and aerospace industry contacts reported steady
activity, while plans for additional auto parts manufacturing plants were announced.
Reports noted that most storm-related disruptions to manufacturing production
were only minor. However, oil refineries remained hampered by supply problems
associated with offshore pipeline damage. District transportation contacts continued
to report strong demand for freight services through October and early November.
Tourism and Business Travel
Reports from the District's tourism and hospitality industry indicated steady
recovery after the recent hurricanes. Contacts were guardedly optimistic about
the 2005 season, with seasonal winter bookings strong in parts of Florida. For
instance, some reports noted that advance bookings for larger Miami Beach and
Palm Beach resorts were stronger than last year. Hurricane-damaged facilities
were under repair and in some cases repair work is expected to take several
months to complete. Florida tourism officials expressed concern about possible
declines in visitor numbers next summer if the predicted number of hurricanes
remains elevated.
Financial
Banking sector reports were mostly positive in October and early November, with
several banks reporting strong income growth and good asset quality. Consumer
loan demand continued to be strong and delinquencies remained at low levels
in most areas. However, reports of home foreclosures increased in locations,
such as some suburbs of Atlanta. Commercial loan demand displayed a modest improvement,
but remained at low levels overall.
Employment and Prices
Reports from labor markets were positive in October and early November. Most
displaced workers in Florida have reportedly returned to their previous employer
or have found new positions since the hurricanes. The surge in hiring for clean-up
jobs has slowed, but construction workers and especially roofers were in high
demand. Construction labor shortages reportedly caused wage costs to increase.
In addition, the influx of construction workers was said to be depleting the
construction workforce in some non-affected areas of the District.
Prices for building materials and energy remained at high levels, according
to most reports. Building costs continued to rise for wood, steel, concrete,
gypsum board, shingles, and shutters. Price increases for reinforced and structural
steel were also reported, in part because of increased overseas demand. Delivery
surcharges by building supply businesses and transporters were widely reported.
Agriculture
The recent rains sharply reduced harvest time and fieldwork for District farmers.
The hurricanes seriously affected production levels for several Florida crops.
The outlook for Florida's citrus growers was made more uncertain because the
hurricane caused spreading of the citrus canker disease. Prices for tomatoes,
peppers and other key Florida crops were reportedly rising because of simultaneous
crop damage in other parts of the country. Reports indicated that this year's
cotton crop might be larger than expected.
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Richmond