July 27, 2005
Federal Reserve Districts
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Business activity in the Eighth District has continued to expand since our previous survey. Manufacturing activity increased in many industries, although several District manufacturers announced plant closings and workforce reductions. Contacts in the services sector continued to report increased economic activity. District retailers and auto dealers had mixed reports for May and June compared with the same months in 2004. Home sales continued to increase in most of the District. Although commercial real estate markets remained soft, some areas showed signs of improvement. Lending activity at a sample of small and mid-sized District banks increased from mid-March to early June.
Manufacturing and Other Business Activity
Activity in the District's services sector has continued to increase in most areas since our previous report. Firms in the freight transportation, utilities, leisure, and insurance industries reported plans to open new facilities and hire new workers. Contacts in the air transportation, tourism, administrative support, wireless, and Internet service industries experienced solid customer growth and high sales volume. Despite overall positive reports, contacts in the business software, real estate, and water transportation industries announced plans to lay off workers. District retailers generally reported increased sales in May and mixed sales in June compared with the same months last year. Discount and large retailer sales remained steady over the same period. Reports from District auto dealers were generally mixed. In some cases, price discounts led to increased sales growth. Inventories generally remained high. Used car sales were strong in May but slowed in June relative to May.
Real Estate and Construction
Commercial real estate markets have remained soft throughout much the District. The first-quarter industrial vacancy rate in Little Rock held steady at nearly 14 percent. Contacts indicated that the industrial and office sectors in Memphis have recently shown signs of improvement. In contrast, the first-quarter office vacancy rate in Louisville increased to 20.4 percent from 18.7 percent at the end of 2004. Contacts in northeast Arkansas reported little new activity in commercial construction, while contacts in northeast Mississippi reported that commercial growth has remained strong. Contacts have indicated that Louisville has several large construction projects on the horizon, and industrial development in DeSoto County, Mississippi, is on the rise.
Banking and Finance
Agriculture and Natural Resources