October 17, 2007
Federal Reserve Districts
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Reports from District contacts indicated that economic activity remained mixed in September. Overall, merchant sales were described as being modestly higher than a year ago. Vehicle sales improved in September for some fuel-efficient models, but other sales were generally disappointing. Reports from the tourism sector were mostly positive with activity exceeding expectations. According to Realtors and homebuilders, the pace of residential home sales and construction continued to decline, and housing inventories increased throughout the District. Manufacturing activity slowed, especially for industries linked to housing markets, and this contributed to reports of weaker regional freight activity. Banking contacts indicated tighter mortgage lending standards and higher foreclosure rates in parts of the District. Several contacts said that the market for skilled workers remained tight, and this contributed to strong wage increases in the skilled trade categories. Florida contacts noted that the overall pace of hiring had slowed. Reports on prices were mixed. Drought conditions continued to adversely affect District crops.
Consumer Spending and Tourism
September vehicle sales were mixed. Some foreign make dealers reported improved sales compared with September 2006, led primarily by an increase in sales of fuel-efficient models. In contrast, domestic brand dealers noted another disappointing month with deliveries to both retail and rental fleets off from a year ago.
Reports on the tourism sector were upbeat. Several Florida contacts said that late summer activity met or exceeded expectations. Contacts in the Orlando market noted that theme park attendance was up, and upscale properties were reporting good occupancy and higher room rates. Passenger traffic through Miami International Airport bettered that of a year ago, including an increase in international visitors. Convention bookings continued to improve in New Orleans, but attendance numbers remained below pre-Katrina levels. The Mississippi Gulf Coast casinos reported another strong month in September.
September reports on commercial construction continued to indicate that activity was flat to slightly up compared with a year ago. Florida contacts also continued to note that fewer projects were in the pipeline.
Manufacturing and Transportation
Banking and Finance
Employment and Prices
Price information was mixed. Producer prices for metals were characterized as volatile. Fabrication costs for petrochemical and oil and gas equipment continued to escalate. Some residential and commercial builders noted moderating lumber prices, while others noted that cement prices have increased from a year ago. Increases in insurance costs continued to be cited by most contacts.
Agriculture and Natural Resources
Oil and gas drilling activity declined in September from August, although rigs and platforms in the Gulf sustained no damage from recent tropical disturbances. Refinery production and drilling activity was hampered by mandatory worker evacuations.