Prepared at the Federal Reserve Bank of Atlanta and based on information collected before November 20, 2006. This document summarizes comments received from businesses and other contacts outside the Federal Reserve and is not a commentary on the views of Federal Reserve officials.
Most Federal Reserve Districts reported continued moderate growth since the
last report. However, New York and Richmond observed that growth accelerated,
whereas Dallas said the pace of activity continued to decelerate from high levels,
and Atlanta described activity as mixed.
Despite continuing softness in automobile and housing-related sales, most
Districts reported that consumer spending increased during October and early
November, and the retail sales outlook for the holiday season was cautiously
optimistic. According to most reports, growth in other service-producing industries
remained generally solid. Manufacturing activity was positive overall, with
the weakest reports concentrated among auto and housing-related producers. Reports
on housing markets continued to indicate an overall decline in single-family
home sales, and there were some reports of lower home prices. Indicators of
single-family construction continued to weaken in most Districts. However, housing
demand continued to be strong in a few specific markets, and nonresidential
activity generally improved. Many Districts noted a continued slowing in mortgage
lending, while reports on other lending were mixed. Some Districts reported
a slight increase in delinquencies.
A number of Districts continued to report that labor markets were tight, especially
for high-skilled occupations. Wage growth remained generally moderate, although
some Districts gave accounts of stronger wage pressures for some specialized
professions. Most Districts reported that prices moderated for construction
materials and energy products.
Most Districts reported increased consumer spending overall. However, there
was some regional variation in the rate of increase. For instance, solid increases
were reported by Kansas City and Richmond, while modest improvements in retail
spending were noted in the Atlanta, Chicago, Minneapolis, New York, and St.
Louis Districts. Meanwhile, sales softened in the Boston District and were below
expectations in the Dallas District. Strong selling products varied by region,
but most Districts reported that sales of home-related items remained weak.
Several Districts noted a cautiously optimistic outlook for the holiday season.
Atlanta reported that high-end and electronics merchants were upbeat, while
more modest gains were expected from other retailers. Kansas City and Minneapolis
District merchants were said to be positive headed into the holiday season,
and sales in the New York, San Francisco, and St. Louis Districts are expected
to exceed year-ago levels. However, retail contacts in Boston remained concerned
about the downturn in the housing market, and Dallas described retailers as
Most Districts reported continued softness in vehicle sales, led by weaker
sales for the Big Three U.S. auto makers. Slow or declining sales were noted
by Philadelphia, Cleveland, Kansas City, Dallas, and San Francisco, and high
vehicle inventories were reported by several Districts. The only account of
improved vehicle sales came from St. Louis, while Chicago described auto sales
Services and Tourism
The demand for services remained healthy according to most reports. Boston reported
that conditions were good for firms providing software and information technology
services, particularly for companies catering to the health care and energy
sectors. San Francisco noted that service providers experienced generally strong
demand, especially in the food and beverage, health care, and transportation
sectors. New York and Richmond noted solid business activity in the financial
The Atlanta, Boston, Minneapolis, New York, and Richmond Districts indicated
that temporary staffing firms experienced solid demand for their services, although
Chicago and Dallas noted that the demand for temporary workers had softened.
The Atlanta and Cleveland Districts reported disappointing demand for freight
services. Atlanta noted that much of the weakness was concentrated in businesses
specialized in moving building materials, while Cleveland reported softness
for shipments of auto-related products. St. Louis noted that the local freight
transportation sector was expanding. Dallas observed that transportation demand
was good, although contacts are anticipating slower growth in coming months.
Reports from the tourism industry were generally positive. Atlanta said that
the Mississippi Gulf Coast gaming revenues returned to near pre-Katrina levels
in October on the strength of re-opened casinos. Kansas City noted continued
high hotel occupancy and solid airport traffic. Boston reported that tourism
was currently "going gangbusters" and that business travel was strong.
Richmond and New York also observed that tourism was stronger than in the last
Manufacturing activity was generally positive in most Districts. New York said
manufacturers noted brisk growth in activity. Boston, Dallas, Kansas City, and
San Francisco reported that production trends in high-tech industries were positive.
Cleveland reported that durable goods production was up slightly on a year-over-year
basis, although demand for steel products continued to soften. Manufacturing
in the Chicago District expanded at a modest pace, with manufacturers of machine
tools and equipment reporting strong demand outside of the motor vehicle industry.
Dallas noted that energy-related manufacturing activity remained strong. In
the Philadelphia region, manufacturers posted small increases in shipments,
but there were also marginal declines in new orders. Most Districts reported
that orders for homebuilding materials and related equipment have trailed off
substantially. In addition, some softness in auto and auto-related production
was noted by Atlanta, Chicago, Cleveland, Kansas City, and St. Louis.
Real Estate and Construction
Almost all Districts reported that overall housing market activity continued
to slow, especially in the single-family segment. Most Districts cited declining
sales and rising home inventories. There were also scattered reports of price
reductions, while the use of non-price sales incentives was reported in the
Cleveland, Dallas, New York, Philadelphia, and San Francisco Districts. Most
Districts reported declines in residential construction. For instance, according
to Cleveland, contractor backlogs decreased about 30 percent and fewer spec
homes were being built. Several Districts indicated that weak conditions are
expected to persist over the next several months. New York and Dallas noted
improved demand for rental housing, while Dallas reported that condominium construction
remained robust. Atlanta observed rising condominium vacancy rates in some markets.
According to most reports, nonresidential markets improved since the last
report. Strengthening demand for office space was seen in the Boston, Dallas,
Kansas City, Minneapolis, New York, and Philadelphia regions. However, some
slowing was noted in the Chicago District. Atlanta noted that the overall level
of nonresidential construction remained modest. In the San Francisco District,
commercial and public project activity continued to expand, although the pace
of growth was slower than earlier in the year.
Banking and Finance
Lending activity was mixed since the last report. Most Districts noted fewer
mortgage originations, although Chicago reported that mortgage refinancing activity
firmed. The demand for commercial and industrial loans was stable or slightly
higher in some Districts. Overall credit quality was described as good, although
Chicago, Cleveland, and San Francisco reported small increases in delinquencies.
Tighter credit standards were noted in the St. Louis and Richmond Districts.
Labor Markets and Prices
Reports suggest that labor markets remained tight since the last report, especially
for high-skilled occupations. Richmond reported strong demand for workers with
sales, life sciences, engineering, and financial skills. Boston said that there
was strong demand in industries such as health care, biotechnology, and engineering.
Kansas City noted shortages of engineers, oil field workers, accountants, welders,
sales people, and truck drivers. New York said that labor markets have strengthened
in a number of industries, including manufacturing, legal services, and banking.
Atlanta and Philadelphia reported that retailers were finding it difficult to
fill holiday-related positions. Dallas noted that labor shortages were acting
as a capacity constraint for some firms. Overall labor market conditions were
little changed according to Chicago, with small gains in employment on net.
Wage growth remained generally moderate, but Boston, New York, and San Francisco
reported faster wage growth for some specialized professions. San Francisco
noted continued rapid wage growth for health care, finance, and construction
workers. According to Boston, pay levels for professional and technical jobs
were being boosted in order to recruit new workers and reduce staff turnover.
Employers in the Philadelphia District indicated that wages have been rising
more rapidly in the past few months than earlier in the year, whereas the pace
of wage increases was steady according to Chicago.
Most Districts reported that prices moderated for construction materials and
energy products. Kansas City noted that prices for some building products have
moderated because of the combination of lower demand and reduced transportation
costs. However, Minneapolis reported further price increases for roofing shingles
and foam rubber, and Cleveland noted that prices for petroleum-related products
remained high. Atlanta and Chicago observed that lower energy prices had led
to a decline in some fuel surcharges. According to Philadelphia, price increases
were not as widespread as they were earlier in the fall. Richmond said that
prices for manufacturing inputs and finished goods rose since the last report,
and Chicago noted that toolmakers and food processors reported raising prices.
Agriculture and Natural Resources
Farm conditions were generally good, although there were reports that excessive
rains delayed harvest and field work in the St. Louis and Richmond Districts.
Higher prices for corn and soybeans benefited farmers in the Minneapolis and
Kansas City Districts. However, the higher feed costs hurt poultry and livestock
producers in the Atlanta, Chicago, Kansas City, and Dallas Districts.
Activity in the energy and mining sectors was generally robust in late October
through mid-November. Dallas, San Francisco, and Minneapolis reported that energy
extraction activity was strong, while Kansas City noted that activity declined
moderately but remained high by historical standards. Atlanta said that much
of the post-hurricane infrastructure repair work had been completed in the Gulf
of Mexico, and Dallas noted that the Gulf Coast refineries are now operating
at high levels.
Return to top
Business contacts in the First District are fairly upbeat, with the exception
of most retail respondents. Revenues in the fall months were generally ahead
of year-earlier levels, with double-digit increases for software and information
technology services firms and also for staffing firms. Commercial real estate
markets continue to strengthen. By contrast, while tourism-related businesses
are doing well, most contacted retailers say sales have softened; in addition,
manufacturers report that orders or sales of products related to housing have
weakened. All respondents say the high end of the labor market continues to
tighten. Pricing is mixed, as energy-related cost pressures have eased but selected
other input and vendor prices are rising.
With the exception of one contact, retail respondents in the First District
report softening sales during the fall. Same-store sales in September and October
range from down 15 percent to up 8 percent from a year earlier. A drugstore
chain reports that business is improving, and expects sales to remain quite
strong. However, another company reporting a sales increase notes that sales
have "taken a real whack," but are ahead of last year because of strong performance
early in the year. A respondent in the home and lumber business indicates that
sales continue to be "way below plan," which he attributes to the downturn in
the housing market; a hardware contact also reports negative fallout from the
housing market. But a discount furniture seller, a retailer selling home electronics,
and a family restaurant chain all attribute their slowdowns to consumers' weaker
finances or other non-housing-related causes.
Inventory levels are mixed, but most changes are in line with plans. Some
retail contacts report cost increases for energy related products, including
rubber and plastics; increases are also reported for steel and selected food
products. However, the price of flat-panel televisions is rapidly declining.
Several contacts report passing along small price increases to their consumers.
Employment has been mostly steady, with some hiring occurring for new store
openings. Many respondents are scaling back capital spending plans in response
to slower sales growth.
A tourism contact reports that "it's been a really good fall," with all New
England areas enjoying a good fall foliage period. Tourism is currently "going
gangbusters" in the Boston area, but starting to slow elsewhere. Business travel
is strong and the convention centers are doing well. Advanced bookings are still
low, with a lot of people purchasing at the last minute on the Internet. Foreign
tourism remains strong. While capital spending on tourist-related facilities
is occurring in the Boston area, including a surge in new spas, there is reportedly
little development elsewhere.
Many retail contacts remain concerned about the downturn in the housing market.
Overall, most are cautious in their outlook. Tourism is expected to remain strong
in the winter months.
Manufacturing and Related Services
First District manufacturers and related services providers generally report
that revenues in late 2006 have been running somewhat ahead of year-ago levels.
Trends for aircraft, energy, and scientific equipment are particularly robust.
Firms making home furnishings and equipment say orders are flat or up a little
from a year ago. On the other hand, contacts report that orders for homebuilding
materials have trailed off substantially of late, and a couple of capital goods
manufacturers indicate that sales have weakened as a result of what they perceive
to be temporary adjustments on the part of customers.
Manufacturers note that rising costs for metals and paper are continuing to
exert pressure on margins. Heavy buyers of these inputs have raised their selling
prices in 2006 and generally expect to increase prices further later this year
or in early 2007. Respondents indicate that their costs for fuel and most other
oil-related inputs have stabilized, although they express some concern about
their high levels. Several firms mention that their business customers' finances
have improved, causing them to be more willing to pay higher prices. Otherwise,
input prices and selling prices mostly are either flat or declining in line
with their recent trends.
Regardless of whether their domestic headcounts increased, decreased, or remained
unchanged over the past year, most manufacturers anticipate that their U.S.
employment levels will hold steady or drift down in coming months. Base pay
increases mostly are expected to remain in the range of 3 percent to 4 percent
in 2007. Production workers are tending to receive lower raises, while experienced
technical and accounting workers are receiving larger increases. Some contacts
indicate that they need to boost pay of professional and technical workers considerably
in the Boston and New York City areas in order to recruit or to stem turnover.
Contacts remain concerned about escalating health care costs.
Several companies report that they plan to expand domestic capacity in either
2007 or 2008. Apart from these projects and some anticipated acquisitions, manufacturers'
U.S. capital spending plans appear to be modest.
The majority of manufacturing respondents expect business to be "pretty good"
in 2007, boosted in part by the introduction of new products. The remaining
contacts express some uncertainty or have diminished expectations concerning
revenue growth, especially during the first half of the year.
Software and Information Technology Services
The majority of software and information technology (IT) services contacts in
the First District report double digit year-over-year revenue increases in the
most recent quarter; however, a couple were down and a communications IT firm
saw revenues decline 30 percent. Growth is particularly strong in the health
care and energy and utilities segments. One energy software company observed
that the combination of energy legislation from 2005 and their clients being
"flush with cash" has made them "willing to loosen their purse strings." By
contrast, a custom applications developer notes that "it is still tough to get
people to spend on IT." Most New England software companies have left selling
prices unchanged as a result of a competitive market environment.
Approximately half of the contacted IT companies are adding technology workers
and sales staff, with companies serving the healthcare sector reporting that
they are hiring aggressively in order to keep pace with demand. Two firms are
downsizing their U.S. labor force; one plans to tighten slightly to be consistent
with their run rate, while another is looking to shift headcount to India. Those
with plans to hire report a tightening in the New England labor market, especially
for specialized technical positions. Respondents cite annual wage increases
for most employees between 4 percent and 8 percent.
Software and IT services contacts indicate that capital and technology spending
is at "normal" levels. Several report that financing has become easier. New
England software and IT firms are generally positive in their outlook, anticipating
steady or accelerating growth.
Business is booming for New England-based staffing firms, with most respondents
citing double-digit year-over-year revenue growth. Staffing firms see strong
demand from a variety of "high-end" sectors, including allied health and nursing,
biotech and pharmaceuticals, engineering, IT, and the financial sector. Contacts
also report growth in temporary-to-permanent and permanent hiring. Manufacturing
remains the only customer sector with flat or negative revenue growth. New England
staffing respondents agree that this has been a record year for the staffing
industry as a whole, and believe that the New England region is matching or
exceeding growth rates in the rest of the country.
With the supply of engineers, nurses, IT specialists, and other skilled professionals
remaining tight, both bill rates and pay rates continue to increase. Respondents
are uncertain regarding the degree to which new health insurance legislation
in Massachusetts and Vermont will affect them, but most are concerned that it
will drive up costs. One contact is worried about a possible increase in the
minimum wage in Massachusetts. Despite these concerns, contacts are optimistic
about 2007, expecting business to continue to expand as long as the economy
Commercial Real Estate
Centrally located office space continues to perform well across New England.
Vacancies continue to fall in Boston's core business district, moving down to
about 8.5 percent overall. Availability (vacancies plus sublease) has also improved,
albeit slightly. Rents are stable or up across the region, with premium office
space above the 15th floor priced at nearly $60 per square foot in Boston.
Contacts report improved leasing fundamentals in regional office space markets,
reflecting job growth. Higher rents and lower vacancies in downtown markets
have led some expanding tenants to move to suburban areas. As a result, suburban
markets are beginning to see increased rents and decreased vacancies.
There remains a remarkable amount of real estate investment in New England,
with contacts continuing to express surprise at the assumptions supporting aggressive
pricing. Though real estate yields are low overall, there is some evidence that
they are increasing slightly as improving market fundamentals have increased
real estate income.
Overall, contacts expect slight decreases in vacancies and slight increases
in rental rates going into the New Year. In addition, real estate investment
is expected to continue to be strong.
Return to top
Second District--New York
Second District economic activity appears to have accelerated since the last
report, while price pressures are little changed. Labor markets have apparently
strengthened in a number of sectors, including manufacturing. Manufacturers
more generally report increasingly brisk growth in activity and little change
in price pressures since the last report. Retailers indicate that sales were
on or above plan in October and early November, with prices little changed.
Tourism activity showed signs of strengthening. Two regional consumer surveys
showed confidence rising sharply in October.
Housing markets remain mixed: New York City's rental market has tightened
further, and there has been some pickup in co-op and condo sales, stemming the
rise in the inventory of unsold units. In contrast, northern New Jersey's housing
sector remains sluggish. Permits to build single-family homes fell sharply in
the third quarter, but multi-family construction permits remained strong. Office
markets in and around New York City generally tightened in October, with Manhattan
Class A rents jumping to record highs. Finally, bankers report some weakening
in loan demand in the household sector but little change in the commercial sector;
they also note little change in credit standards and delinquency rates.
Retailers report that sales were on or above plan in October and early November,
while merchandise prices were steady. Retail contacts generally indicate sluggish
sales of furniture and other home-related goods, but fairly strong sales in
other categories. Retail contacts continue to characterize current inventory
levels as favorable. Looking ahead to the holiday shopping season, retailers
generally expect same-store sales gains to range from 2-5%. Contacts also report
that they expect to hire about the same number of holiday workers as in 2005.
Surveys of consumers in the region show confidence rising sharply in October:
Siena College's survey of New York State residents shows consumer confidence
jumping to a 7-month high, while the Conference Board's survey of Middle Atlantic
(New York, New Jersey and Pennsylvania) shows confidence at a 6-year high.
Tourism activity has shown increasing strength. Broadway theaters report that
both attendance and total revenues rose steadily in October and early November,
following a dip in September; in recent weeks, attendance has been running roughly
4 percent higher than a year earlier, while revenue is up nearly 12 percent.
Manhattan's hotel occupancy rate remained close to 90 percent in October, which
is little changed from both September and a year earlier; however, rising room
rates pushed total revenue nearly 15 percent above comparable 2005 levels in
October--the largest 12-month gain recorded this year. Hotels in the Buffalo-Niagara
Falls area report rising occupancy rates over the past year.
Construction and Real Estate
Both residential construction activity and housing markets continue to be mixed,
with New York City generally out-performing the rest of the District. Permits
to build single-family homes in New York and New Jersey weakened noticeably
in the third quarter, falling more than 25 percent from a year earlier, whereas
multi-family permits remained strong, rising 7 percent from 2005 levels, led
by New York City. A contact in New Jersey's homebuilding industry reports that
both demand and traffic are weak, and that steep discounts are being offered
to sell completed or almost completed units; selling prices are now said to
be down from a year ago. A contact also notes that home re-modelers have seen
a marked slowdown in business, except at the high end.
In contrast, New York City's housing market has remained fairly robust: a
major Manhattan appraisal firm reports that sales activity picked up in October
and that selling prices remain moderately higher than a year ago. The inventory
of unsold homes, though still fairly high, is reported to have leveled off in
recent months, but there is a substantial volume of new construction in progress,
much of which will flow onto the market during 2007. A major real estate firm
reports that Manhattan's rental market has continued to tighten, in particular
noting a shortage of large units, which has pushed up rents.
Commercial real estate markets across the New York City area showed further
signs of tightening in the third quarter. In Manhattan, office vacancy rates
fell to new cyclical lows at the end of October, while asking rents on Class
A properties surged to their highest levels on record. Suburban markets were
more mixed, but still generally strong on balance: office vacancy rates edged
down to cyclical lows in Fairfield and Westchester Counties and were virtually
unchanged in northern New Jersey; Long Island's vacancy rate, though still fairly
low, climbed to its highest level since a year ago.
Other Business Activity
A major employment agency reports that the labor market has grown increasingly
tight, and that recruiters are using referral bonuses more aggressively to find
skilled workers; moreover, firms are reported to be making increasingly widespread
conversions from temporary to permanent positions. Hiring is reported to be
particularly strong in the legal services and banking industries; a rebound
in demand is also noted for workers in public relations and advertising. A contact
at a financial industry association indicates that business activity, revenues
and profits have strengthened in recent months, and that hiring activity has
been solid. Wall Street bonus payments (largely paid out in January) are expected
to be up more than 15 percent from the prior year, following a comparable gain
Various regional business surveys point to strengthening conditions in October
and early November. Purchasing managers in the Rochester and Buffalo areas report
increasingly widespread improvement in business conditions in October, and steady
to lower price pressures; the Rochester-area survey also indicates a pickup
in hiring. More recently our November Empire State Manufacturing Survey points
to some acceleration in activity, a pickup in hiring activity, and some tightening
in price pressures after some easing-off in recent months. Contacts in non-manufacturing
industries also report expanding employment at their firms and anticipate widespread
increases in wages over the next six months.
Small to medium-sized banks in the 2nd District report little change in loan
demand from the commercial sector but some (largely seasonal) weakening in demand
for consumer loans and especially residential mortgages: more than one in two
respondents report declining demand for home mortgage loans, while fewer than
one in seven report increasing demand. Bankers report some tightening in credit
standards on commercial mortgages but little or no change in other segments.
Bankers indicate a decrease in loan rates for residential mortgages but little
change in other loan categories. Fairly widespread increases are again reported
for average deposit rates. Finally, delinquency rates remained steady in the
household sector but were up slightly for commercial mortgages.
Return to top
Economic conditions in the Third District improved slightly in November. Manufacturers
posted small increases in shipments, but there were also marginal declines in
new orders. Retail sales of general merchandise rose. However, auto sales did
not increase. Bank lending increased overall, although not strongly, but mortgage
lending declined. Residential real estate activity continued to decrease; by
contrast, commercial real estate markets tightened further.
Third District business contacts generally expect business activity to continue
to expand, but at a slow pace; however, they anticipate further softening in
residential real estate. Manufacturers expect some improvement during the winter.
Retailers are forecasting increased sales for the upcoming holiday season compared
to a year ago. Auto dealers do not expect sales to pick up in the near future.
Bankers anticipate slight gains in business and consumer lending but a further
decline in mortgage lending. Residential real estate agents and builders expect
further slowing in home sales through the winter. Contacts in commercial real
estate expect demand for office and industrial space to remain strong.
Third District manufacturers reported little change in business conditions from
October to November. On balance, they reported a slight increase in shipments
and a slight decrease in new orders. The decrease in orders affected most of
the region's major manufacturing sectors, although makers of food products and
apparel generally noted rising demand. Area manufacturers reported an easing
in order backlogs but also a small increase in delivery times.
Overall, manufacturers expect demand for their products to increase, but they
are not forecasting strong gains. Among the manufacturers contacted in November,
a little more than one-third expect their shipments and orders to increase during
the next six months; about one-fifth expect decreases. The capital spending
plans of Third District manufacturers increased between October and November.
On balance, however, the number of firms scheduling increased outlays remained
below the number that raised capital spending earlier in the year.
Most of the retailers contacted for this report indicated that sales have increased
in recent weeks, although the strength of growth varied among stores. Department
stores and most apparel specialty stores reported that sales of new fall merchandise
have been up solidly compared with a year ago. Sales growth for most other types
of stores and lines of merchandise has not been robust, and sales of home improvement
items have been generally below retailers' plans. Looking ahead, area retailers
expect current trends to last through the holiday shopping season. Area retail
executives expect sales growth to continue at the current rate for department
stores, most apparel specialty stores, and for luxury merchandise. They say
prospects for growth are less strong for discount stores and for home furnishings,
appliances, and consumer electronics.
Auto sales in the region showed no signs of increasing in November, and some
dealers reported a slowing in sales. Year-to-year sales comparisons continued
to be better for foreign makes than for domestic makes. Inventories remained
above desired levels for many dealers but did not appear to be increasing. Auto
dealers in the region expect sales to remain sluggish through the winter, and
they say the outlook for 2007 is uncertain.
The volume of loans outstanding at Third District banks rose slightly in November,
according to commercial bank lending officers contacted for this report. Commercial
and industrial lending increased for most banks, but many said the rate of growth
had slowed recently. Credit card lending expanded, but the rate of increase
has eased somewhat. Growth in other types of personal lending also slowed, and
some banks reported substantial softening of demand for personal credit. Demand
for residential mortgages continued to decline.
Bankers in the District expect business and consumer lending to increase slowly
in the months ahead, but they foresee a further decline in the demand for residential
mortgages. Bankers noted that both business and personal loan quality was good.
However, several bankers said they are concerned that builders, land developers,
and other firms involved in residential real estate and construction might soon
face cash flow problems, and they are monitoring these borrowers closely.
Real Estate and Construction
Commercial real estate firms reported that vacancy rates in the region's office
markets have continued to decline in the past few months, and rents have risen.
The amount of leased space has increased in both the Philadelphia and Wilmington
central business districts and in suburban markets throughout the region. The
increase in occupancy has resulted in a scarcity of large blocks of available
space. Commercial real estate contacts report that there has been an increase
in the construction of buildings to accommodate anticipated demand for large
blocks of space with up-to-date features, while demand for space in older buildings
is falling. Demand for office space and high-tech research and manufacturing
facilities is expected to increase into next year, with much of the demand coming
from firms in the financial, health care, and pharmaceutical industries.
Residential real estate agents and homebuilders surveyed in November indicated
that sales were declining, continuing the sharp slowdown that began during the
summer. Real estate contacts noted that the number of existing homes for sale
and the time they are on the market have risen. Home builders reported significant
increases in cancellations. They have reduced prices for resold houses and increased
the value of free upgrades for all houses sold. Price appreciation of existing
homes in recent months has been well below the pace recorded over the past few
years. Homebuilders and real estate agents expect the pace of sales to slow
further during the winter. While most expect sales to recover next spring, several
said they do not anticipate a substantial rebound.
Prices and Wages
Business firms in the Third District noted increases in the costs of raw materials
and other inputs, although reports of price increases were not as widespread
in November as they were earlier in the autumn. Manufacturers noted continued
increases in prices for metals and energy, although the incidence of such increases
appears to have slowed since the summer. Retailers indicated that they have
implemented price reductions for some lines of merchandise, especially consumer
electronics and home appliances, but that prices for most other types of goods
have been kept near plan.
Employers in many industries reported that labor markets remain tight for
skilled workers and some professional occupations. Retailers noted that they
have had some difficulty in hiring temporary sales workers for the holiday season.
In contrast, the slowdown in residential construction has resulted in greater
availability of construction workers. Area employers indicated that wages have
been rising at a nearly steady rate in the past few months, somewhat above the
rate of increase recorded earlier this year and a year ago.
Return to top
Economic activity in the Fourth District grew at a moderate pace since early
October; however, the housing market, restructuring in the auto sector, and
some raw material prices have tempered enthusiasm. Production at District manufacturers
was steady to increasing with the expectation that production will remain at
current levels for the next six months. Several commercial builders report activity
has slowed, but business remains relatively strong overall. New residential
construction was mixed with a few builders experiencing a pick-up in activity.
Sales by District retailers were more in line with expectations after a somewhat
disappointing September. Loan demand at District banks was flat while core deposits
were up slightly. And the demand for trucking and shipping services continues
On net, hiring across the District was stable. Staffing firms reported increased
job openings since early October with some contacts saying that openings were
up across the board. Wage pressures are not seen as an issue at this time. Almost
all contacts said that, with the exception of metals, the rise in input costs
continues to moderate. Manufacturers attempting to raise their prices met with
a mixed degree of success. And almost all retailers reported that they were
holding their prices steady.
Since early October, production by the District's durable goods manufacturers
was stable or up slightly with higher production levels reported on a year-over-year
basis. Demand for steel products continues to soften due to weakness in the
auto, appliance, electrical distribution, and residential construction markets.
Although District auto production increased in October, a decline was seen on
a year-over-year basis. The outlook by most durable manufacturers is for production
to remain at current levels over the next six months. Two contacts expecting
lower production attribute it to seasonal adjustments. Almost all manufacturers
said they were operating at normal capacity and that capital expenditures remain
on target. Although a majority of the producers expect little change in spending,
five respondents said they were going to increase capital expenditures in 2007.
Input costs were mixed with higher costs being attributed almost exclusively
to metals. Hiring has been limited over the past six weeks; however, four contacts
said they are planning some hiring in the near future. Wage pressures are largely
contained. Several contacts reported that benefits, especially health care,
continue to rise.
Production levels at the District's nondurable goods facilities were steady
to increasing since early October and on a year-over-year basis. Expectations
for the next six months are mixed with one manufacturer saying that the auto
industry could affect their output. About half of our contacts reported idle
capacity. Most manufacturers said capital expenditures met or exceeded projections;
further, about half expect to increase spending during the next few months.
Input costs were relatively stable. Most manufacturers said they have no plans
to hire in the near future and three reported reducing their workforce during
the past six weeks. Wage pressures remain contained.
Sales by District retailers since early October were more in line with expectations
after a somewhat disappointing September. However, customers are highly selective
in their purchases. Drug stores report particularly strong sales driven primarily
by pharmaceuticals. Overall, vendor prices have remained stable during the past
six weeks with decreases seen in lumber and generic drugs. Retailers have passed
on this price stability to customers. Most contacts report wage pressures are
contained, but the cost of health care benefits continues to rise, albeit at
a more moderate rate. Aside from normal seasonal hiring, retailers are limiting
employment opportunities to new store openings. One contact reported reducing
their workforce through attrition. Retailers are expecting a very competitive
Most contacts said that new car sales declined in October for a second straight
month; further, purchases continue to be heavily dependent on dealer incentives.
Reports on SUV sales are mixed with high-end SUVs holding their own.
Residential contractors in the District are continuing to adapt to the housing
market correction through workforce cutbacks, delaying land purchases, and building
fewer spec homes. Since early October, new home sales have been mixed with about
half our contacts reporting a pick-up in sales while the other half report slow
to declining sales. Almost all builders expect that the correction will continue
until at least mid-2007. Backlogs for most contractors have decreased about
30 percent. Discounts or incentives being offered to prospective buyers are
in the range of 5-8 percent of a home's asking price. Material costs are mixed
with builders seeing declines in lumber, drywall, and cement; however, petroleum-related
products remain high. Contacts report that land and development costs continue
The District's commercial contractors reported that activity has slowed since
early October, but remains relatively strong overall. Most contacts have experienced
an increased level of business on a year-over-year basis. Contractors are anticipating
a strong first half in 2007 due to current backlogs and stable inquires. Segments
continuing to show strong activity are health care and public works; manufacturing-related
construction is beginning to pick-up. Material cost increases continue to slow
or have stabilized which is contributing to a small increase in profit margins.
Contractors reported little change in the size of their workforce, although
a few have hired or are looking to hire.
Since early October, commercial and consumer loan demand was flat to declining
for most District banks. Nearly all contacts reported a slight gain in core
deposits. Activity in the mortgage market continues to be slow; customers looking
to refinance are showing a preference for fixed-rate mortgages. Several bankers
are concerned about small increases in delinquencies; however, credit quality
remains relatively strong. The consensus outlook by District bankers is for
a continuation of tight margins and a modest deterioration in credit quality.
Demand for trucking and shipping services continues to soften with a slight
volume decrease on a year-over-year basis. Most contacts reported a slowdown
in the shipment of auto-related products. Trucking companies continue to pass
on fuel costs using surcharges; however, it's becoming more difficult due to
competition and customer resistance. Trucking companies were hiring, but activity
was limited to finding replacements due to driver turnover. One contact reported
laying-off workers. Wages have remained stable during the past six weeks.
Return to top
Economic activity in the Fifth District expanded at a somewhat stronger pace
from late October through mid November, despite continued sluggishness in housing
markets. Revenues at services firms grew slightly faster, aided by firmer demand
at health care organizations and government contractors. Retail sales grew briskly,
despite sluggishness in most big-ticket categories. Manufacturing reversed its
October dip, posting increased shipments and orders in recent weeks. Commercial
leasing remained strong, while housing activity continued to weaken somewhat,
with softer prices more in evidence. Mortgage lenders, however, noted some firming
in loan demand following several months of weakening activity. Tourism was healthy,
with most areas reporting gains in recent weeks. Labor markets tightened further,
with some reports of higher wages and shortages of skilled workers. Price pressures
were mixed, moderating in retail and services, but ramping up in manufacturing.
Mild temperatures and ample rainfall helped small grains, but limited fieldwork
opportunities for District farmers.
Contacts reported that retail sales grew at a substantially faster pace in early
November, although weakness remained in most big-ticket categories. Chain department
stores and grocery stores noted stronger sales, and big box retailers said electronics
sales were especially robust. In addition, a contact at a large hardware store
in central Virginia said sales growth had picked up, even with significant price
increases on "anything made with steel or petroleum." In contrast,
sales slowed at home improvement and building supply stores as housing activity
remained sluggish. The pace of automobile and light truck sales was generally
unchanged from a month ago, though a few dealers said their sales declined in
recent weeks. Retailers were upbeat but somewhat guarded about holiday sales
this year; some looked for holiday sales to increase about 4% compared to last
year. Although a few District automobile dealers and furniture stores reduced
staff, hiring picked up at most retail businesses. Wages grew more quickly at
retail establishments, while price growth slowed.
District services firms indicated that their revenues grew slightly faster since
our last report. Customer demand strengthened at healthcare organizations and
utilities, and federal government contractors said that business had picked
up with the new federal fiscal-year budget. Additionally, a financial services
consultant in Virginia characterized demand as steady, and he noted improving
client attitudes regarding the economy. Contacts at services firms said the
pace of hiring moderated this month. Wage and price growth also slowed.
Activity in the manufacturing sector picked up during the first half of November
following a contraction in October. Contacts told us that factory shipments,
new orders and employment expanded at a solid pace in recent weeks. Activity
was particularly strong at chemicals, food, industrial machinery and transportation
equipment firms; a turbine producer in South Carolina, for example, said that
the oil industry was driving his business. He indicated that they had received
three large turbine contracts for Saudi Arabia. A plastics producer was also
upbeat, noting, "November was a good month; we've had a flurry of new orders
and our backlogs are strong." In contrast, a furniture manufacturer in North
Carolina reported that sales had reached their lowest level since the post September
11, 2001 period. Prices for both raw materials and finished goods picked up
considerably in November after rising moderately in October.
District bankers reported that loan demand steadied since our last report. Residential
mortgage lending remained weak, but some increased demand in the new homes sector
helped to stabilize loan volume. Some contacts said that builders were slashing
prices which "caused more people to get in on the action." A number of mortgage
lenders reported that loan standards had tightened. A Charleston, S.C., banker
noted that his bank was more carefully scrutinizing "the type of properties
receiving loans, but not applicants." The demand for commercial loans held firm
in October and November. Little change was reported in interest rates or the
rates of delinquent loans.
Residential real estate agents across the District reported continued weakness
in home sales. A Washington, D.C., agent told us that sales were down 17 percent
from a year earlier, and he predicted that this trend would persist for another
two years. In Richmond, Va., home sales were also reported to have fallen below
2005 levels. An agent there told us that buyers were not rushing to make purchasing
decisions--they could afford to "pick and choose." Home inventories continued
to rise modestly and some sellers were trimming asking prices. In contrast,
a contact in Greenville, S.C., reported "positive sales" which he attributed
mostly to large companies locating there recently. Several contacts noted modest
decreases in home prices.
Commercial real estate agents across the District reported that leasing activity
remained healthy in recent weeks. In the Raleigh market, a contact said industrial
activity was "on fire," driven by strong population growth in the area. Contacts
generally reported that vacancy rates edged down since our last report and several
noted a slight uptick in rental rates.
Tourist activity was generally stronger since our last report. A contact on
North Carolina's Outer Banks said hotels and resorts were booked solid for the
Veteran's Day weekend. She attributed the increase primarily to their first
marathon which attracted 4,400 runners. In addition, a manager at a mountain
resort in western Virginia noted record-breaking time-share sales--up nearly
20 percent over last year. In contrast, a hotelier at Virginia Beach reported
that some corporate clients had scaled down their budgets--resulting in less
money being spent on food and beverages.
Temporary employment agencies in the District continued to report generally
firmer demand for workers since our last report. In some areas, tight labor
markets had made it difficult for companies to fill needed positions. Workers
with sales, life sciences, engineering and financial skills remained in strong
Mild, rainy weather conditions assisted small grain development in most areas
of the District, but rains delayed field work in some regions. Analysts in Virginia
and Maryland told us that soggy field conditions hindered soybean harvests.
They noted, however, that higher grain prices in recent weeks encouraged farmers
to continue small grain plantings when the weather permitted. In South Carolina,
harvesting of sweet potatoes and apples was ahead of schedule, while corn and
soybean harvests fell behind schedule in West Virginia. Harvests of cotton,
peanuts, sweet potatoes, sorghum and soybeans were nearing completion in North
Carolina, and Christmas tree producers in that state said they were preparing
for the holiday season.
Return to top
Reports from Sixth District contacts indicated that business activity remained
mixed for October through mid-November. Retail sales were described as modest
while auto sales were varied. Construction activity continued to decline, as
cuts to residential building were only partially offset by modest growth in
nonresidential development. Manufacturing reports were mixed. For instance,
defense-related industries noted stronger activity, while building material
suppliers reported weaker demand. Transportation firms also observed slower-than-expected
demand. Banking conditions were little changed. Shortages of workers in several
professional and technical occupations were noted throughout the District, and
lower-skilled workers were in short supply on the Gulf Coast and in South Florida.
These shortages were being reflected in higher wages. Most industrial contacts
noted that input prices had moderated.
Most District retailers said that sales in October through mid-November were
modestly higher than a year ago. Merchants in Louisiana and Mississippi noted
that sales were down relative to last year's post-Katrina surge in spending
on replacement goods. Strong reports came from electronics and high-end retailers,
and their outlook was very upbeat heading into the holiday season. Other District
retailers were cautiously-optimistic about the holiday season and anticipated
modest sales growth compared with last year. The majority of retailers surveyed
in October indicated that inventory levels were up slightly from the same time
District auto sales remained uneven across vehicle brands and market areas.
Domestic auto dealers reported soft sales, while imports continued to gain market
share. High inventory levels caused a large South Florida-based auto dealer
to cut fourth-quarter orders from domestic automakers by 30 percent. Contacts
from regional import distributors reported stronger October performances, with
regional sales better than comparable sales nationally.
Weakness continued to be reported in District housing markets, with Florida
continuing to experience the most significant declines. Contacts reported that
new home construction and home sales remained well below year-ago levels in
Florida. Condominium markets in some coastal areas have experienced particularly
high vacancy rates. Inventories of unsold single-family homes reportedly continued
to rise across much of the District, and weak market conditions are expected
to persist over the next several months. Reports suggested that some small builders
are facing financial difficulties, but there were no indications that this was
a large scale problem in the District.
Growth in nonresidential construction remained modest, with infrastructure
repairs and improvements continuing to dominate activity in the District. The
most significant increase in activity was noted in Louisiana. Most commercial
builders continued to expect modest growth in the coming months, although the
pace of activity is expected to accelerate along the Gulf Coast.
Manufacturing and Transportation
Manufacturing activity varied by sector in October and early November. Layoffs
associated with a major plant closure idled thousands of District auto workers.
The slump in the residential construction industry led to production cutbacks
by some suppliers of housing-related materials such as flooring, framing lumber,
wallboard and plywood. A producer of heavy-truck trailers reported a decline
in new orders. More positively, a large military contractor reported increased
orders from the U.S. Navy, and a pipe producer reported that demand from the
energy sector was strong.
Trucking contacts reported disappointing freight demand, with much of the
weakness concentrated in the retail and building materials sectors. Trucking
industry contacts in Atlanta noted that retailers were not increasing inventories
to the levels usually seen at the beginning of the holiday-shopping season.
Trucking firms servicing the construction industry reported a decline in orders.
Tourism and Business Travel
Most reports from the tourism industry were positive. Attendance at major trade
shows and conventions increased in central Florida. Nashville and Atlanta's
hospitality industry also reported improved business, with hotels enjoying increasing
occupancy rates. Mississippi Gulf Coast gaming revenues were near pre-Katrina
levels in September and October as many of the damaged casinos have re-opened.
According to gaming officials, employment at the casinos on the Mississippi
Gulf Coast had also returned to near pre-hurricane levels.
Banking and Finance
Overall banking conditions were little changed in October. Weak loan demand
continued to be noted in most parts of the District, lead by lower levels of
mortgage lending. Deposit growth was mixed, with some parts of the District
noting strong deposit growth, while others observed flat to slow growth in October
and early November. Credit quality remained strong in the region. Commercial
and industrial lending slowed overall, though there were reports of stronger
demand in southern Louisiana.
Employment and Prices
Skilled workers remained in short supply in parts of the District. Contacts
in South Florida and Nashville noted shortages of nurses, while North Alabama
reported difficulty filling engineering positions. In Louisiana, shortages of
skilled workers in the energy extraction industry were noted. Some shortages
were posted for other types of labor as well, especially along the Gulf Coast
and South Florida. An Alabama temporary staffing firm has seen increased demand
from manufacturing and defense-related companies. In addition, some retail contacts
expressed concern about their ability to find additional workers for the holiday
period, and some holiday-related temporary positions have experienced higher
wages as a result. Wage increases were also reported in the hotel, financial
services, and healthcare industries. Some layoffs in the construction industry
were reported in Florida, and wages were said to be stabilizing.
Most reports indicated that commodity prices had moderated. According to construction
industry contacts, lumber prices dropped in November. Also, energy and related
feedstock costs have declined for industrial users. Pulp and paper, chemical,
and plastics manufacturers noted that costs for their oil and gas inputs had
eased, and this has helped profitability. Some reports also noted that the decline
in gasoline prices was feeding through to lower fuel surcharges on shipping.
Agriculture and Natural Resources
Poultry and livestock producers reported an escalation of feed costs, partly resulting from the growing use of corn for
ethanol production. Most of the post-hurricane infrastructure repair work has
been completed in the District's energy sector.
Return to top
Economic activity in the Seventh District expanded at a modest pace during
October and early November. Consumer spending continued to increase at a gradual
rate, and business spending expanded again. Overall labor market conditions
were little changed, with small gains in employment on net. Residential construction
and real estate activity continued to decline in most areas, while nonresidential
construction was steady on balance. Manufacturing expanded at a modest pace.
Lending activity moderated further. Overall, nonwage price pressures eased a
bit, while overall wage increases were similar as in the previous reporting
period. Prices for corn and soybeans rose, as this year's yields turned out
to be smaller than were expected in September.
Consumer spending continued to increase at a gradual rate in October. Retailers
said Halloween sales were "positive," and one contact thought this boded well
for the holiday shopping season: "If they'll spend at Halloween, just think
how much they'll spend at Christmas!" Nonetheless, retailers were said to have
taken a conservative approach to inventories. Restaurant sales were higher than
expected over the past six to eight weeks; one contact suggested that lower
gas prices helped support demand. Auto dealers reported that sales remained
relatively steady in recent weeks, though showroom traffic was soft. Tourism
was similar to a year ago.
Business spending and hiring rose again in the District. For the most part,
capital spending continued to increase at similar rates as in the previous reporting
period. A toolmaker reported plans for further capacity expansions in 2007,
a restaurant chain increased its planned outlays for renovations, and a manufacturer
noted continued strong levels of spending on high-tech equipment. Overall, labor
market conditions were little changed, with small gains in employment on net.
Manufacturing employment was mixed by industry. Toolmakers increased employment
but noted continued shortages of skilled workers. In contrast, an automaker
said that the planned reductions in their workforce were running ahead of their
targets. A temporary help services provider said that billable hours growth
in the District was a bit softer, but the firm's outlook was favorable as forward
orders had maintained their previous trends.
Construction and Real Estate
Residential construction and real estate activity continued to decline in most
areas and market segments. One notable exception was the Milwaukee area, where
homebuilders reported high traffic through model homes and strength in the construction
of upper-end homes. One contact said that lot sales were soft and that some
people who already owned lots were waiting for construction costs to come down
before building. Nonresidential construction was steady on balance: new development
was flowing at a steady pace, and there were few reports of project cancellations.
A contact in Michigan reported strong demand for medical space, while net absorption
of office space in Chicago slowed. Commercial rents were creeping up in Indianapolis,
but flat in Michigan and Illinois.
Manufacturing activity expanded at a modest pace in October and early November.
Sales of large- and medium-sized heavy equipment continued to grow at solid
rates. Demand for equipment related to nonresidential construction was expected
to expand at a slower rate in 2007, while demand for smaller equipment used
in home construction was expected to decline further. Manufacturers of machine
tools and equipment parts reported continued strong order growth in most market
segments outside of motor vehicles. One partmaker noted that demand was led
by the electronics and semiconductor industry. Another toolmaker noted that
its exports continued to grow faster than the rest of its business. Light vehicle
manufacturers reported softer sales nationwide. They indicated that there was
little room to alter production plans for the fourth quarter but cuts in the
first quarter schedules were possible. A steelmaker noted that vehicle production
cuts continued to show through in weaker orders for flat-rolled steel, but other
segments of the steel market were slowing as well and were expected to remain
sluggish through the first quarter. Steel production in the Midwest was said
to be slowing more sharply than in the rest of the nation. Steel inventories
moved further above desired levels. Wallboard shipments fell, and capacity utilization
in the industry declined.
Banking and Finance
Lending activity moderated further. Bankers noted continued stagnation in mortgage
applications for home purchases. But refinancing activity firmed in October
and early November as lower interest rates stimulated demand. Demand for new
home equity loans declined further, but the usage rate of existing credit lines
ticked up. Household credit quality generally remained in good shape: delinquency
rates on mortgages were stable, but delinquencies on home equity loans edged
up. Retail deposit growth slowed, as some depositors sought higher returns in
money market accounts. Business loan demand was flat. Lending for equipment
and inventories remained steady, but real estate lending leveled off following
a period of solid gains. A banker in the Chicago area said that institutional
real estate investors remained active, though there had been some slowdown by
smaller investors. Commercial lending conditions continued to be competitive
and interest rate margins remained narrow. One banker noted that commercial
real estate borrowers were starting to seek interest-only and other alternative
loan structures. Commercial credit quality remained in good shape, with steady
ratios of non-accruing loans.
Prices and Costs
On balance, nonwage price pressures eased a bit, while overall wage increases
were similar as in the previous reporting period. Several contacts reported
continued declines in energy costs, and a few transportation firms had begun
rolling back surcharges. Prices for hot rolled and scrap steel declined, and
wallboard prices also fell. In contrast, toolmakers reported further price hikes,
and many food prices increased as well. There were no reports of significant
changes in price movements at the retail level. One automaker increased discounting,
and incentive activity was expected to increase further as inventory levels
remained high. Wage increases continued at similar rates as in the previous
reporting period. A temporary help firm noted that wages for high-skilled positions
were moving "appropriately" higher, but their customers were reluctant to increase
wages for lower-skilled positions, even though these jobs were getting a bit
more difficult to fill.
Most farmers completed their harvest during the reporting period. Corn and soybean
yields were at least average, though not as good as expected last reporting
period. Corn and soybean prices increased to substantially higher levels than
a year ago. Many farmers held grain off the market as they waited for prices
to move even higher. Contacts indicated that more farmers than usual already
had locked in prices for the next growing season and some were writing contracts
for even farther in the future. Ethanol production kept rising, but some plans
for new plants and expansions of existing facilities have been postponed or
put on hold. In some cases, construction delays stemmed from the lack of availability
of equipment for the plants. In other cases, investors reassessed the feasibility
of their plans based on the rapid increase in ethanol supply and zoning issues.
Livestock and poultry operations were hurt by higher feed costs. In addition,
District dairy producers struggled with low milk prices.
Return to top
Eighth District--St. Louis
Economic activity in the Eighth District expanded at a moderate pace since
our previous report. Manufacturing activity increased modestly, while growth
in the services sector remained strong. Contacts reported that retail and auto
sales increased slightly in October and early November compared with a year
ago. Home sales reports were mixed and commercial real estate market conditions
varied across the District. Lending activity at a sample of District banks changed
little in the three-month period ending in October.
Contacts reported that retail sales in October and early November were up, on
average, over year-earlier levels. About 65 percent of the retailers saw increases
in sales, while 17 percent saw decreases. About 39 percent of the retailers
reported that sales levels met their expectations, 33 percent reported that
sales were above what they had anticipated, and 28 percent reported sales below
expectations. Apparel, food, and electronics were all strong sellers, while
home furnishings were moving more slowly. Two-thirds of the contacts reported
that inventories were at desired levels; 29 percent reported that inventories
were too high, and 5 percent reported that inventories were too low. About 70
percent of contacts expect that upcoming holiday sales will increase over 2005
levels, while 13 percent expect decreased sales.
Car dealers in the District reported that sales in October and early November
were up, on average, over year-earlier levels. About 35 percent of the car dealers
surveyed reported an increase in sales, while another 35 percent reported a
decrease. About 30 percent of the car dealers reported that used car sales had
increased relative to new car sales, while 9 percent reported the opposite.
Also, 26 percent reported an increase in low-end vehicle sales relative to high-end
vehicle sales. About 22 percent of contacts reported tighter financing options,
but over 90 percent of the contacts reported no change in acceptance or rejection
rates of finance applications. Nearly 36 percent of the car dealers surveyed
reported that their inventories were too high, while 23 percent reported that
their inventories were too low. About 30 percent of the car dealers expect that
sales for the next two months will increase over 2005, while 26 percent expect
Manufacturing and Other Business Activity
Manufacturing activity expanded modestly since our previous report. While the
majority of contacts reported plans to expand operations or hire additional
workers in the near future, several manufacturers reported plans to close operations
and lay off workers. Firms in the primary metal, biofuel, plastics, chemical,
aerospace, packaging, and paper manufacturing industries announced plans to
open or expand facilities in the District. Contacts in the food, chemical, and
plastics industries reported plans to hire additional workers. In contrast,
firms in the beverage and auto parts industries reported plans to close plants
in the District. Firms in the appliance, machinery, furniture, and auto parts
industries reported plans to lay off workers.
The District's services sector continued to expand in most areas. Contacts
in the freight transportation, professional, and financial services industries
reported plans to open or expand facilities in the District. A contact in the
data processing services industry reported plans to expand operations and hire
additional workers. In contrast, a contact in the business support services
industry reported plans to lay off workers.
Real Estate and Construction
Home sales reports were mixed throughout the District. October 2006 year-to-date
home sales increased 8 percent in Memphis but declined 1 percent in Louisville
and about 3 percent in Little Rock and St. Louis. Residential construction remains
low throughout the District. September year-to-date single-family housing permits
declined in nearly every metro area compared with the same period in 2005. Permits
declined 33 percent in Louisville, 23 percent in St. Louis, 12 percent in Little
Rock, and 11 percent in Memphis. In contrast, permits increased roughly 3 percent
in Jackson, Tennessee.
Commercial real estate market conditions remain mixed throughout the District.
The third-quarter 2006 industrial vacancy rate declined from the second quarter
in St. Louis and Memphis but increased in Louisville. During the same period,
the office vacancy rate declined in St. Louis, Memphis, Louisville, and Little
Rock. Contacts in Little Rock reported that September year-to-date commercial
construction permits are down roughly 5 percent over 2005. In west Tennessee,
contacts reported that commercial construction has increased substantially.
Contacts in Louisville reported that several large distribution centers are
planned for construction in 2007, and contacts in St. Louis reported that industrial
construction remains active.
Banking and Finance
A survey of senior loan officers at a sample of District banks showed little
change in overall lending activity in the three months ending in October. During
this period, credit standards and demand for commercial and industrial loans
remained unchanged for both large and small firms. During the same period, credit
standards for commercial real estate loans tightened somewhat, while credit
standards for residential mortgages and consumer loans remained basically unchanged.
Demand for commercial real estate and consumer loans remained unchanged, while
demand for residential mortgages was moderately weaker.
Agriculture and Natural Resources
Recent wet weather throughout much of the District has slowed the pace of crop
harvesting. Nevertheless, about 90 percent of all corn, soybeans, sorghum, and
cotton and all of the rice in the District have been harvested. The rains have
delayed some planting of winter wheat, especially in Kentucky and Mississippi,
but over 88 percent of the emerged winter wheat in each District state is rated
in fair condition or better.
Return to top
The Ninth District economy grew since the last report. Increases in activity
were noted in consumer spending, manufacturing, energy, mining, and agriculture.
Meanwhile, tourism activity was mixed, and residential real estate and construction
activity decreased. Signs of a tighter labor market were noted. Overall price
increases were modest as fuel prices decreased.
Consumer Spending and Tourism
Overall consumer spending rose moderately, and prospects for holiday sales were
generally positive. A major Minneapolis-based retailer reported same-store sales
up about 4 percent in October compared with a year ago. Recent sales at a Minneapolis
area mall were up 4 percent from a year ago; expectations for the holiday season
were positive. Sales at a North Dakota mall were up 3 percent in October compared
with last year, according to the mall manager, and store owners were optimistic
for the holiday season. According to members of the Minneapolis Fed's board
of directors, retailers in the Bozeman, Mont., area are expecting robust holiday
sales and retailers in the Billings, Mont., area are expecting sales at levels
similar to last year. A survey of holiday spending plans in the Minneapolis-St.
Paul area by researchers at the University of St. Thomas suggests that holiday
spending in 2006 will be up slightly from 2005. A St. Paul area mall manager
said that recent sales activity was comparable with last year. New and used
car and truck sales were relatively solid during the past two months, according
to an auto dealer in Minnesota.
Overall tourism activity was mixed. Fall tourism in northern Minnesota and
Wisconsin was up from last year, according to Bank directors. The number of
deer hunting licenses issued this fall was slightly above last year's level
in Minnesota. After a strong September, October tourism activity was down about
7 percent from last year's level in western South Dakota, according to an official.
Crossings at the International Bridge in the Upper Peninsula of Michigan were
down 6 percent in October compared with a year ago.
Construction and Real Estate
Commercial construction was up. Recent commercial construction activity was
robust in the Bismarck, N.D., area, according to a representative of a commercial
real estate firm there. The value of October commercial building permits in
Sioux Falls, S.D., was about even with last year's record levels, and office
construction was up slightly. A Minneapolis developer hired a design firm to
begin plans for a large new office tower in its central business district. Plans
were announced for the redevelopment of a historic skyscraper into a luxury
hotel in downtown Minneapolis. However, residential construction continued to
slow. October residential construction permits for Rochester, Minn., were down
42 percent in value from a year earlier. The value of new permitted housing
in October fell 17 percent in Sioux Falls from last year's record levels.
Commercial real estate activity continued at a fast pace. Industrial, retail
and office markets in the Minneapolis area saw positive absorption in the third
quarter; office absorption is expected to top 1 million square feet there by
year end, and lease rates are rising. Residential real estate continued to slide.
The median home sales price for Minneapolis-St. Paul fell 1 percent in October,
and closed sales were down almost 20 percent. A Bank director in Billings, Mont.,
reported that home sales were down slightly from a year earlier, but dollar
volumes were down more. Preliminary results indicate more than three-quarters
of respondents to the Minneapolis Fed's business outlook poll (November) expect
housing starts to be down in their communities this year, but most don't expect
that to adversely affect their sales, profits, investment or hiring.
Growth was evident in the manufacturing sector. Based on preliminary results
from the Minneapolis Fed's annual business outlook poll, respondents from the
manufacturing sector expect growth in company sales, employment and capital
investment in 2007. Meanwhile, a November survey of purchasing managers by Creighton
University (Omaha, Neb.) indicated increased manufacturing activity in North
Dakota and Minnesota and reduced activity in South Dakota. A brewery in western
Wisconsin is building a new plant. In South Dakota, a visual communication systems
manufacturer plans to add a facility.
Energy and Mining
Activity in the energy and mining sectors grew since the last report. Oil and
gas exploration and production in the District were level with previously reported
amounts. However, the alternative energy industry, including wind, biodiesel,
and ethanol, continued to expand at a solid pace. In addition, $5 billion worth
of new traditional power plants are planned to supply the mines and other industry
in northern Minnesota. Mining production remained at near-capacity across the
Agricultural activity increased since the last report. Higher corn and soybean
prices were welcomed by District crop producers. Good harvests were reported
in many parts of the District. In Minnesota, the corn harvest was a strong 1.1
billion bushels, soybean production was up from last year and a record amount
of sugar beets was produced. In addition, record harvests of corn and soybeans
were forecast in North Dakota. Meanwhile, most of the winter wheat crop has
emerged in good to excellent condition. However, preliminary results of the
Minneapolis Fed's third-quarter (October) agricultural credit conditions survey
indicate that overall agricultural income will be down in the fourth quarter
of 2006 due to higher input costs.
Employment, Wages, and Prices
Signs of a tightening labor market were noted. According to preliminary results
of the Minneapolis Fed's business outlook poll, 58 percent of respondents describe
securing workers as a challenge or serious challenge. Two boat manufacturing
plants in Minnesota are expected to add 140 jobs as a result of company restructuring.
Businesses in western Minnesota are having difficulty hiring temporary employees,
and a shortage of welders was reported in South Dakota.
However, in Minnesota almost 300 jobs at a department store's head offices
and a distribution center will be eliminated by next spring, a vending machine
manufacturer recently laid off 200 workers, a printing services provider will
close a plant resulting in 72 job losses and a newspaper plans to eliminate
about 40 positions. In the Upper Peninsula of Michigan, a manufacturer announced
plans to lay off 170 workers.
Overall wage increases were moderate. The aforementioned business outlook
poll showed nearly three-quarters of respondents expect wages and salaries in
their community's businesses to increase between 2 percent and 3 percent. However,
a member of the Advisory Council on Small Business and Labor reported that wages
at mines in Montana were up over 10 percent and generous signing bonuses have
Overall price increases were modest as prices for fuel declined. Prices for
many fuels and natural gas were down since the last report. Mid-November gasoline
prices in Minnesota were about the same as they were at the end of September,
but down 81 cents per gallon since August. Price increases were noted for roofing
shingles and foam rubber.
Return to top
Tenth District--Kansas City
The Tenth District economy continued to experience moderate growth in October
and early November. Consumer spending strengthened despite slightly weaker auto
sales, and labor markets continued to expand. Commercial real estate activity
also increased further, while manufacturing grew modestly. Energy activity fell
slightly but was still high by historical standards, and agricultural conditions
were generally favorable. Residential real estate activity continued to decline.
Wage pressures were generally moderate, while price pressures eased slightly.
Consumer spending increased solidly in October and early November, despite a
slight easing in auto sales. The share of retail stores reporting increased
sales from the previous survey continued to rise following a slowdown in the
summer, and recent sales were higher than expected at many stores. Gains were
reported across a variety of market segments, with sales of apparel particularly
strong. On the other hand, sales of home furnishings remained relatively weak.
Contacts generally expected a solid holiday sales season. Auto dealers reported
a modest decline in sales from the previous survey, which pushed inventories
above desired levels at many dealerships. However, vehicle sales remained above
year-ago levels and contacts were generally optimistic about the future. Travel
and tourism activity remained strong in October and early November. District
hotels continued to report high occupancy rates, and airport traffic was solid.
Most hotel and tourist attraction operators expected high levels of activity
to persist through the end of the year.
Manufacturing activity in the District expanded modestly in October and early
November. Plant managers continued to report slower growth in production, shipments,
and new orders than earlier in the year, and order backlogs and finished goods
inventories fell for the first time in over a year. Producers of automotive,
residential construction, and agricultural equipment reported especially slow
sales. On the other hand, manufacturers who supply equipment to the energy,
railroad, aircraft, commercial office, and high-tech industries reported strong
demand. Plant managers expressed less optimism about near-term output than in
previous surveys, and one contact reported a reduction in productivity due to
limited skills and motivation among recently-added employees. However, factory
activity was still well above year-ago levels, and capital spending plans remained
Real Estate and Construction
Residential real estate activity decreased in October and early November, while
commercial real estate activity strengthened further. Builders indicated that
home starts continued to drop and were below year-ago levels. Further easing
in home construction is expected in the months ahead. Residential real estate
agents reported continued declines in home sales, and additional decreases are
anticipated. Inventories of existing homes were still well above year-ago levels
but largely unchanged from the previous survey. Home inventories were generally
expected to begin falling in the months ahead, with the slowdown in construction.
Home prices were steady in most cities and still well up from a year ago in
Albuquerque and Oklahoma City. Many contacts in Colorado, however, reported
moderate price declines and expected further easing in the future. Commercial
real estate activity continued to improve. Sales and absorption of office space
increased in most cities, and vacancy rates were lower than a year ago throughout
the District. As a result, office prices and rents increased further. Most commercial
real estate agents anticipated continued strengthening in the months ahead,
although a few contacts were concerned about potential over-building of single-story
suburban commercial space.
Bankers reported that loans increased somewhat since the last survey, while
deposits held steady. Demand for commercial and industrial loans rose, while
demand for residential mortgage loans edged down. On the deposit side, interest
bearing deposits such as CDs and money market deposits were slightly higher
than in the prior period, while demand deposits were lower. Lending rates and
lending standards were basically unchanged.
Energy activity declined moderately in October and early November but remained
strong by historical standards. The count of active oil and gas drilling rigs
in the region fell slightly compared with the previous survey but was still
well above year-ago levels. The recent decline was concentrated in the Rocky
Mountain area, where contacts reported the cost to drill, equip, and produce
wells was becoming prohibitive. One contact also noted that many exploration
companies had moved their offshore drilling rigs in the Gulf of Mexico to other
parts of the world due to difficulties in obtaining hurricane insurance. Most
contacts anticipated steady drilling activity going forward, as energy prices
remained relatively high.
Agricultural conditions remained generally favorable in October and early November
despite a lack of moisture across much of the District. The corn and soybean
harvest was nearly complete, and winter wheat emergence was progressing normally.
The unseasonably warm and dry weather aided harvest activities but continued
to deplete soil moisture in many vulnerable parts of the District. Higher market
prices benefited producers of wheat and corn. Livestock producers, however,
faced higher feed costs combined with weak pasture conditions.
Labor Markets and Wages
Labor markets continued to expand in the District, while wage pressures remained
moderate. Hiring announcements continued to outpace layoff announcements in
the region, and several contacts noted increases in newspaper and radio job
advertisements. The majority of businesses reported some type of labor shortage,
especially for skilled and specialized workers, including engineers, oil field
workers, accountants, welders, sales people, and truck drivers. Given the overall
shortage of workers, one contact lowered language standards for new employees.
Several contacts said more firms were hiring workers away from other companies,
resulting in higher wage expectations. Still, the overall share of businesses
experiencing wage pressures remained steady.
Price pressures eased somewhat in October and early November. The share of manufacturers
reporting increased materials costs continued to fall, and the share of factories
raising finished goods prices also dropped slightly. Builders reported metal
prices remained high, but prices for some other construction materials have
moderated due to both lower demand and lower transportation costs. More manufacturers
than in previous surveys expected prices to rise in the coming months, and builders
said any increase in fuel costs would lead to price hikes. Most retail contacts
reported flat selling prices and expected little change in prices in the months
ahead. However, several restaurants in Colorado planned to raise menu prices
to cover expected increases in labor costs resulting from the passage of a new
minimum wage law.
Return to top
In October and the first half of November, the Eleventh District economy continued
to decelerate from high levels. While there remains strength in the manufacturing,
construction, finance and service sectors, there are also areas of softness.
Many industries reported increased caution about the outlook. Energy activity
was strong overall, but there was still little change in the rig count. Retail
sales were weaker than expected. Manufacturing activity remained strong to supply
the energy industry but continued to report slowing sales to residential building.
Service sector activity was also mixed, with a dip in demand for temporary workers.
Nonresidential building is strong, but home sales and home building weakened
further. Financial service firms reported softer consumer lending, but credit
quality is healthy and commercial lending is good. Agricultural conditions improved
over the past six weeks.
Energy prices have stabilized at relatively high levels. West Texas Intermediate
crude oil prices have floated between $57 and $61 in recent weeks. U.S. demand
for crude oil has risen as refiners return from seasonal maintenance, but crude
oil inventories remain high. Gasoline prices at the pump fell sharply, boosting
gasoline consumption and reducing inventories. Demand for heating oil and diesel
has been strong, but inventories have built up with mild weather, while pump
prices have stayed near $2.50 per gallon as the result of reduced sulfur requirements.
Natural gas prices strengthened seasonally during the period, from $6 to $8
per million Btu at Henry Hub. Inventories are at very high levels and a mild
winter is expected, which has some contacts raising the possibility that natural
gas prices might take a downward bounce.
Other prices were mixed. Overall home prices are unchanged, but prices have
declined in some metropolitan areas, particularly in Dallas and Fort Worth.
Building costs to supply nonresidential construction are unchanged, but prices
are lower for products supplying home building. Paper prices were unchanged,
but prices of corrugated boxes were lower. Accounting firms raised fees to cover
rising salaries. Prices for corn, grain sorghum and wheat were up sharply.
The labor market remains very tight, and wages were rising in many industries.
Workers shortages were reported by service, manufacturing, finance and energy
firms. A lack of labor is a capacity constraint for some firms and, in some
areas, companies have resorted to using billboards in an attempt to attract
workers. While the shortage extends to many types of skilled and semi-skilled
workers, of particular note in this survey were reports of difficulty finding
engineers, electricians, high-tech technicians, certified mechanics and accountants.
Some firms have reached out to community colleges in an attempt to boost the
supply of qualified workers.
While the labor market remains tight, softening sales have led some manufacturers
to slow hiring as a precaution. The shortage of qualified truck drivers seems
to have eased some.
Manufacturing activity continued to cool. Demand remained strong for refining,
some chemicals, and for products to supply commercial construction and oil and
gas drilling. However, sales to homebuilders slowed further, pushing up inventories
for some products and causing some firms to reduce production. Food producers
report an increase in demand. Sales of paper products increased slightly, but
demand for corrugated boxes softened some. High-tech manufacturers reported
generally good growth in production and orders, although there were a few firms
that reported some recent softening in orders.
Gulf Coast refineries are now operating at high levels. The return from maintenance
was delayed in some cases by labor and construction shortages or by relatively
weak margins that offered less incentive to produce. Refining margins have been
strong by historical standards, but are only half to one-third of the high margins
enjoyed over the summer.
Petrochemicals were mixed. Ethylene production was affected by a series of
planned and unplanned outages that have supported prices and kept profit margins
high. There was a sharp seasonal decline in demand for polyethylene, and the
decline in homebuilding has hurt demand for PVC pipe. In contrast, demand for
synthetic rubber is very strong. Prices are high, and margins are excellent.
Demand for isobutylene, used in many consumer products, weakened in September
and October but returned strongly and has been pushing capacity limits in early
Temporary staffing firms say activity slowed earlier than expected and the volume
of new orders was below last year levels. The slowdown was concentrated in manufacturing;
however, contacts noted that they had seen a fall off in demand in other industries
as well. Demand for legal services held steady over the past month but activity
was up compared with a year ago. Accounting firms saw no change in activity.
Shipping firms report good demand but anticipate slower growth in coming months.
Cargo volumes remained flat and continued to be buoyed by domestic demand for
nondurable goods. Container trade activity rose sharply, with growth partly
coming from an increase in steel imports. Railroads indicated no change in overall
volumes but noted that shipments of lumber, wood and other building products
were down substantially over the past month. Trucking firms said demand softened
further which, according to contacts, helped ease the shortage of truck drivers
in the industry. Airlines report continued good demand overall.
Retail sales growth has been weaker than expected. Some contacts had expected
a greater pick up in sales following the drop in gasoline prices. Sales continue
to be weakest to lower income customers who were more affected by high energy
costs. Sales were weakest for home items, particularly for furniture. Respondents
have become more cautious about the outlook for holiday sales, which they say
will be very competitive. Inventories are in good shape, although retailers
say they are watching them closely.
Demand for autos remains soft, although lower gasoline prices have resuscitated
sales of some domestic vehicles. There were reports of higher than desired inventories.
Construction and Real Estate
District home sales continued to slow, but activity has been mixed. Sales are
still strong in some areas, such as Houston, but sales and traffic are down
significantly in the Dallas/Fort Worth area. Cancellations have edged up, especially
for lower priced homes. Homebuilders and real estate agents noted increased
uncertainty and uneasiness among buyers that they blamed partly on reports of
weakness in other parts of the country. Builders have pulled back on starts
and increased buyer incentives in an attempt to manage rising inventories.
Apartment demand remained solid, and rents are rising. Despite the departure
of Katrina evacuees, apartment occupancies are at or above 90 percent in most
Texas metros. Multifamily construction activity was still strong, but contacts
said a shortage of building sites and high construction costs have held back
construction of Dallas-area apartments.
Demand for office space remains strong, and rents continue to increase. Contacts
say investor interest remains high. Occupancy rates are edging up--and in Austin
have reached a five-year high. A Houston respondent said rents were up dramatically
in some areas. Office construction continues in all major metros. Dallas contacts
remain optimistic that demand will be sufficient to absorb the increased volume
of speculative projects currently under construction.
Consumer lending continued to slow for all types of products, including mortgages,
credit cards, personal and auto loans. Credit quality is still good, and mortgage
delinquencies do not appear to be a problem for District lenders. Commercial
lending is very good, although contacts expect activity to slow. Competition
for experienced and talented lenders continues to be intense.
Energy activity remained generally strong, but the rig counts continued to be
mostly unchanged in the United States and Texas. Oil service companies are working
through an extensive backlog of orders, and there are still shortages of people
and equipment. Day rates continue to rise but more slowly than earlier in the
year. International activity continued to grow strongly.
Contacts are cautious about weak natural gas prices and rising drilling costs,
and say that drilling for natural gas in high cost areas is the most vulnerable.
Firms have completed extensive hiring and training of new employees and made
large commitments to internal capital expansion and R&D. Companies say they
can shift crews and equipment across basins or around the world, wherever backlogs
Recent rains boosted cattle grazing conditions, and many producers are optimistic
they will get a good cutting of hay before the first freeze. Still, supplemental
feeding of herds continues in the driest regions, and rapidly rising feed costs--particularly
for corn--have substantially lowered calf prices. Rain has helped wheat and
oat crops get off to a good start, but were too late for cotton, pecan, peanut,
soybean and sorghum. Harvest of these crops is underway, and yields are better
than expected but below last year's levels.
Return to top
Twelfth District--San Francisco
Economic activity in the Twelfth District continued to expand at a moderate
pace on net during the survey period of October through mid-November. Reduced
energy prices reversed upward price pressures for some products, while the pace
of wage growth remained contained overall but exerted upward price pressures
in some industries and areas. District retailers generally reported improved
sales and service providers saw strong demand. Orders and output grew further
for most manufacturers and agricultural producers. District housing markets
continued to cool, while demand for commercial real estate expanded but at a
slower pace than previously. Banks reported solid loan demand and good credit
quality in general.
Wages and Prices
Upward price pressures diminished somewhat, as prices for energy and related
products receded from previously high levels, reducing overall production costs
in some sectors. Prices fell further for selected building materials used primarily
for residential construction. More generally, respondents noted relatively stable
input prices. The primary exceptions were selected commodities such as flour
and sugar: significant price increases of late for these inputs are expected
to show up in the final prices of some food products in early 2007.
Overall wage growth remained moderate. However, wage growth continued to be
more rapid for selected groups of skilled workers, notably in the health-care,
finance, and construction sectors, and in areas with very tight labor markets
overall, such as Idaho and Utah. Scattered reports also suggested employers
were becoming increasingly reliant on using hiring bonuses to recruit skilled
workers who are in short supply. These compensation increases exerted noticeable
upward pressure on final prices in some cases.
Retail Trade and Services
District retailers reported improved sales growth and balanced inventories for
items other than motor vehicles. Sales at department stores and specialty shops
picked up relative to the previous survey period, spurred in part by increased
spending power arising from lower gasoline prices. Considering early sales figures,
retailers are cautiously optimistic in their forecasts for the holiday season
as a whole, with expected sales growth generally in the range of 4 to 6 percent
relative to last year. Demand for automobiles weakened slightly compared with
the previous survey period. Sales of fuel-efficient import vehicles continued
at a solid but slightly reduced pace, while the recent drop in fuel prices did
little to offset sluggish sales for large, fuel-inefficient domestic models;
inventories of domestic light trucks and SUVs reportedly were at record highs.
Service providers reported generally strong demand. Sales grew significantly
in the food and beverage, health-care, and transportation sectors. Contacts
in various sectors reported that fuel surcharges have been trimmed due to lower
energy costs, reducing the price of transportation services. Overall tourist
activity remained at high levels, although a Southern California contact noted
that recent convention business there has not kept pace with last year.
Demand for District manufactured products expanded further in October and early
November. Sales of semiconductors grew at a solid pace in line with industry
forecasts, and capacity utilization generally remained in the range of 90 percent.
Producers of commercial aircraft and their parts suppliers continued to operate
at full capacity to meet ongoing order backlogs, while makers of machine tools
indicated that new orders grew but at a slightly reduced pace. Food manufacturers
reported continued strong sales. By contrast, demand for selected building materials
used primarily for home building fell further, and some sawmills in the Pacific
Northwest have sharply curtailed production or closed due to reduced demand
for wood products.
Agriculture and Resource-related Industries
Demand for District agricultural and resource-related products was strong and
production conditions were stable overall. Sales rose for livestock and most
crops, and prices received for these items increased compared with a year ago,
notably for selected commodities such as corn. Prices for fertilizers and freight
services have fallen significantly, easing upward pressures on production costs.
In the resources sector, producers of oil and natural gas continued to see robust
demand, although one contact reported that demand for natural gas slowed somewhat
due to reduced sales of new homes.
Real Estate and Construction
Activity in residential real estate markets fell further, while demand for commercial
real estate expanded but at a slower pace than previously in some areas. The
pace of home sales and price appreciation continued to slow for existing and
new homes, with particularly weak conditions noted for the latter. To work down
unsold inventory, home builders have been offering significant incentives to
entice buyers; these incentives reportedly have been valued as high as 10 percent
of the listed prices. Residential construction activity has fallen substantially
along with demand for homes. On the nonresidential side, vacancy rates for commercial
space fell further and rents rose a bit in most areas. Construction activity
for commercial and public projects continued to expand, largely offsetting the
decline in residential construction, although the pace of growth was slower
than earlier in the year. Some contacts noted that investors and builders have
grown more cautious about committing to nonresidential projects, due in part
to the high costs of land, labor, and building materials.
District banking contacts reported solid loan demand and good credit quality
overall. Further growth in commercial and industrial loans continued to offset
declines in residential mortgage originations. Demand for consumer loans fell
slightly in some areas but remained relatively strong. Credit quality was high
in general with few delinquencies. However, contacts provided scattered reports
of delinquencies on loans to home builders, and banks have increased their vigilance
over these loans. Venture capital and private equity financing reportedly remained
on a modest but steady growth path.
Return to top