November 30, 2011
Federal Reserve Districts
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The Second District's economy has continued to grow slowly since the last report, while the labor market has generally been stable. Manufacturers report that general business conditions and employment levels have been steady in recent weeks but that they plan to add workers in the months ahead. Consumer spending has continued to expand at a moderate pace: auto dealers report that sales were steady to stronger in October, non-auto retail contacts report that sales have been on or ahead of plan, and tourism activity has been generally robust. Home sales and prices have generally held steady since the last report, though rental markets continued to strengthen. Commercial real estate markets have shown slight signs of softening. New York City financial firms continue to face adverse business conditions and have announced impending layoffs. Finally, bankers report a pickup in demand for commercial mortgage loans, continued tightening in credit standards, and lower delinquency rates on commercial and industrial loans.
Consumer confidence has weakened noticeably since the last report. Both Siena College's October survey of New York State residents and the Conference Board's survey covering the Middle Atlantic states (NY, NJ, PA) show consumer confidence falling to its lowest level in more than a year. Tourism activity has been generally robust since the last report. Albany-area hotels report strong improvement in occupancy rates in September. New York City hotels report that occupancy rates were steady at about 90 percent in September and October--up modestly from 2010 levels; room rates were up roughly 4 percent from a year earlier in October and total revenues were up about 6 percent. However, Broadway theaters report that attendance fell 5-10 percent below year ago levels in October and early November--in part reflecting fewer shows open this year. Still, total revenues have continued to run ahead of 2010 levels, reflecting double-digit percentage increases in revenues per show.
Construction and Real Estate
Commercial real estate markets have been steady to slightly weaker since the last report. Office vacancy rates in both midtown and downtown Manhattan ticked up in October; the average asking rent continued to climb, but this is attributed to the fact that much of the space recently coming on the market is in high-priced buildings. A contact in western New York State reports that commercial leasing activity remains flat, while commercial construction activity has picked up slightly but remains sluggish; credit availability continues to be a restraining factor for the market.
Other Business Activity
Both manufacturers and service-sector firms continue to report stable employment levels but indicate plans to increase headcounts, on balance, over the next six months. Manufacturing firms across New York State report that general business conditions have held steady over the past month, and they express increased optimism about the near term outlook. Non-manufacturing contacts are also increasingly optimistic about the near-term outlook, though less so than manufacturers.