The Federal Reserve’s latest round of reports from its twelve districts indicate that overall economic activity continued to expand in September, although many districts described the pace of growth as “modest” or “slight” and contacts generally noted weaker or less-certain outlooks for business conditions.
The “Beige Book” released this week showed business spending had increased somewhat, particularly for construction and mining equipment and auto dealer inventories, but many districts noted restraint in hiring and capital spending plans.
In the construction and manufacturing sectors of most interest to the electrical industry, manufacturing and transportation activity were reported to have increased, and a few districts also reported slight improvements in construction and real estate activity. Nonetheless, said the Fed, overall conditions for both residential and commercial real estate remained weak.
Contacts in a number of districts reported that a weaker and more uncertain economic outlook had increased caution and was weighing on future spending plans. Auto dealers were an exception, as they continued to replenish inventories that ran low in the aftermath of the production disruptions caused by the Japanese disaster. Capital spending continued as planned in most districts. Boston and Minneapolis indicated that some manufacturers planned to expand capacity either through mergers and acquisitions or the building of additional facilities.
Contacts indicated that manufacturing and transportation activity increased since the last report in most districts. A large number of districts reported higher production of autos and other transportation-related equipment. Dallas reported healthy demand for nondefense transportation goods. Boston, Richmond, Kansas City and San Francisco indicated continued growth in commercial aviation and aerospace manufacturing.
All twelve districts reported that real estate and construction activity was little changed on balance from the prior report. Residential construction remained at low levels, particularly for single-family homes. Commercial real estate conditions remained weak overall, although commercial construction increased at a slow pace in most districts.