Federal Reserve's Beige Book Shows Growth Slowing in Some Key Electrical Sectors

Sept. 6, 2012
The Federal Reserve's latest collection of anecdotal observations on business conditions throughout the United States found the economy continuing to grow gradually in July and August but at a slower pace across most business sectors and geographic regions.

The Federal Reserve's latest collection of anecdotal observations on business conditions throughout the United States found the economy continuing to grow gradually in July and August but at a slower pace across most business sectors and geographic regions.

Six of the central bank's 12 districts indicated the local economy continued to expand at a modest pace and another three cited moderate growth. Among the latter, Chicago noted that the pace of growth had slowed from the prior period. The Philadelphia and Richmond Districts reported slow growth in most sectors and declines in manufacturing, while Boston cited mixed reports from business contacts and some slowdown since the previous report.

Manufacturing activity seemed to be softening in many districts, either a slowdown in the rate of growth or a decline in sales, output or orders. Selling prices for manufacturing and retail products were largely stable. Weakness overseas remains a problem for U.S. manufacturing. Reports from the Boston, Atlanta, and Chicago districts explicitly mentioned it. Although Europe represented one notable problem, several districts also mentioned weakness in demand in Asia as an issue. Across all districts, few manufacturing firms reported any major hiring or layoffs, and the Cleveland district reported that firms continued to have trouble finding skilled workers. Capital spending among manufacturers showed little change.

Real estate markets were generally said to be improving, with sales and construction continuing to increase. On the residential side, all 12 districts cited increases in home sales, home prices or housing construction. Several districts noted that improvements in residential construction boosted demand for products such as lumber, PVC, cement, and home goods (they didn't mention electrical supplies specifically). In general, outlooks were positive, with continued increases in activity expected, although the projected gains were more modest in Boston, Cleveland, and Kansas City.

Reports on commercial real estate markets were also generally positive as nearly all districts held steady or improved in recent weeks. New York, Philadelphia, Minneapolis and Kansas City all reported that commercial leasing increased and vacancy rates fell. Kansas City also cited a rise in commercial construction. Commercial building permits were up significantly from one year ago in portions of the Minneapolis district. Chicago's report was mixed: office vacancy rates remained high, restraining demand for new office construction, but office leasing demand improved modestly and industrial construction picked up. Office and industrial real estate markets remained healthy in Dallas. The St. Louis report noted an increase in commercial construction across much of its region and varied reports on leasing. Multi-family real estate remained a strong submarket and a key driver of construction in many districts.

The Federal Reserve's latest collection of anecdotal observations on business conditions throughout the United States found the economy continuing to grow gradually in July and August but at a slower pace across most business sectors and geographic regions.

Six of the central bank's 12 districts indicated the local economy continued to expand at a modest pace and another three cited moderate growth. Among the latter, Chicago noted that the pace of growth had slowed from the prior period. The Philadelphia and Richmond Districts reported slow growth in most sectors and declines in manufacturing, while Boston cited mixed reports from business contacts and some slowdown since the previous report.

Manufacturing activity seemed to be softening in many districts, either a slowdown in the rate of growth or a decline in sales, output or orders. Selling prices for manufacturing and retail products were largely stable. Weakness overseas remains a problem for U.S. manufacturing. Reports from the Boston, Atlanta, and Chicago districts explicitly mentioned it. Although Europe represented one notable problem, several districts also mentioned weakness in demand in Asia as an issue. Across all districts, few manufacturing firms reported any major hiring or layoffs, and the Cleveland district reported that firms continued to have trouble finding skilled workers. Capital spending among manufacturers showed little change.

Real estate markets were generally said to be improving, with sales and construction continuing to increase. On the residential side, all 12 districts cited increases in home sales, home prices or housing construction. Several districts noted that improvements in residential construction boosted demand for products such as lumber, PVC, cement, and home goods (they didn't mention electrical supplies specifically). In general, outlooks were positive, with continued increases in activity expected, although the projected gains were more modest in Boston, Cleveland, and Kansas City.

Reports on commercial real estate markets were also generally positive as nearly all districts held steady or improved in recent weeks. New York, Philadelphia, Minneapolis and Kansas City all reported that commercial leasing increased and vacancy rates fell. Kansas City also cited a rise in commercial construction. Commercial building permits were up significantly from one year ago in portions of the Minneapolis district. Chicago's report was mixed: office vacancy rates remained high, restraining demand for new office construction, but office leasing demand improved modestly and industrial construction picked up. Office and industrial real estate markets remained healthy in Dallas. The St. Louis report noted an increase in commercial construction across much of its region and varied reports on leasing. Multi-family real estate remained a strong submarket and a key driver of construction in many districts.