The Federal Reserve Open Market Committee’s periodic evaluation of economic conditions at the regional level – i.e., its latest Beige Book – finds that national economic activity continued to expand during the mid-November through late December period studied. Most districts reported “modest” to “moderate” growth, with the exception of Kansas City, which found only slight growth in December. Most of the contacts for the anecdotal survey, in KC and elsewhere, expect faster growth over the coming months. One widespread concern reflected uncertainties around the uneven impact of lower oil prices. In the sectors of the economy most critical to the electrical industry, business seems to be strong.
Manufacturing
Manufacturing activity expanded in most districts. Philadelphia reported that manufacturing activity grew at a modest pace during the current reporting period, with a slight slowdown relative to the previous period. Reports regarding new orders and shipments in the Philadelphia district suggested some further slowing moving forward. Manufacturing shipments and new orders grew modestly in the Richmond district. Contacts at factories in the Cleveland district reported that demand increased a bit on balance. Manufacturing activity grew at a moderate pace in Boston, New York, Chicago, and San Francisco. However, a manufacturer in the Boston district indicated that congestion at West Coast ports had impeded its exports. Activity in the auto industry in the Chicago district remained a source of strength for the region. Atlanta reported that manufacturing activity strengthened overall. Minneapolis and Kansas City reported that manufacturing activity increased only slightly during the reporting period.
Construction
Single-family home construction was generally flat across the 12 districts. Sales declined somewhat on a year-over-year basis in the Boston, Cleveland, Atlanta, Chicago, Minneapolis, Kansas City, and Dallas districts. Builders of new homes in the Philadelphia district reported weak traffic for prospective buyers and fewer contract signings. The Cleveland, Atlanta, Chicago, Minneapolis, and Kansas City districts all reported slightly slower single-family residential construction activity. However, the pace of single-family home construction increased in some areas of the San Francisco district.
Commercial real estate, meanwhile, saw a continued expansion of activity, the Fed said. Activity grew modestly in the Philadelphia district and a bit faster in the Atlanta and Chicago districts. Atlanta cited the multifamily residential segment as a source of growth, while Chicago credited demand for industrial and office buildings. Commercial builders in the Cleveland district reported a moderate to robust increase for projects in the pipeline. Dallas reported that overall commercial construction was strong. San Francisco reported that multifamily residential construction was strong in many areas of that district and that retail, office, industrial, or infrastructure projects were widespread across that district.
Full report: Beige Book - January 14, 2015