Fed Sees Signs of Economy Picking Up

Oct. 24, 2003
The pace of U.S. economic expansion has picked up in recent weeks, according to the Federal Reserve’s latest Beige Book report.

The pace of U.S. economic expansion has picked up in recent weeks, according to the Federal Reserve’s latest Beige Book report. Ten of the 12 Fed districts indicate that The activity has been expanding, while two — Boston and Cleveland — report mixed but steady levels of economic activity. The report covered a period from late August into early October.

The majority of the districts report a pickup in manufacturing activity, with several indicating significant improvement in a wide variety of industries.

Residential construction is also indicated to be strong in most districts.

Commercial real estate markets, in contrast, continue to be characterized as weak in almost all districts.

Boston: Economic activity in Boston is largely stagnant. Most merchants report sales in September about level with a year ago, while the majority of contacted manufacturers indicate that third-quarter revenues were below year-earlier levels. Most manufacturers continue layoffs. The outlook remains cautious.

New York: The economy has shown further signs of strengthening in recent weeks. The labor market, in particular, has shown signs of firming, while price pressures have diminished. Recent business surveys point to some acceleration in manufacturing activity since the last report, as well as a noticeable pickup in employment and steady to declining input prices. Both residential construction and the market for existing homes have strengthened.

Philadelphia: Business conditions improved slightly in September. Manufacturers reported increases in orders and shipments for the month. The consensus forecast in Philadelphia is for slowly improving conditions. Manufacturers forecast increases in shipments and orders during the next six months.

Cleveland: Business conditions remained mixed in August and September. Residential construction activity and mortgage-related lending remained at high levels, although some contacts noted a slight deceleration in September. Conditions remained steady in commercial construction.

Richmond: Despite disruptions from Hurricane Isabel, economic growth advanced at a modest pace in late August and September as ongoing moderate expansion in the services sector was partially offset by continued contraction in the manufacturing sector.

Atlanta: Reports from contacts suggested that business activity continued to expand during September. District residential housing markets continued to post steady growth, whereas commercial real estate markets displayed small improvements. Factory activity showed further signs of stabilizing.

Chicago:Economic activity continued to show signs of modest improvement in late August and September. However, many businesses wanted to see a longer period of firming in demand before committing to hiring, expanding capacity, or inventory building. Construction and real estate activities continued to be characterized by strong residential markets and weak commercial markets. Manufacturing activity continued to expand.

St. Louis: Contacts indicate that the region’s economy is showing modest signs of improvement. Favorable reports in the manufacturing and services industries suggest that economic activity increased since the last survey, although announcements of plant closings, downsizing, and layoffs remain. Home sales rose in most of the district in August, while commercial real estate markets remained weak.

Minneapolis: Overall economic activity increased in late August and September. Residential real estate, manufacturing, agriculture, consumer spending and mining grew. Meanwhile, tourism was mixed, and commercial real estate and energy were down slightly. Labor markets were soft. Wage and price increases were generally moderate; however, significant price increases were noted in natural gas, freight and health insurance, with decreases in gasoline.

Kansas City: The economy continued to expand in late August and September. Manufacturing strengthened further, and more firms than in previous surveys reported increased hiring and investment.

Dallas: Overall economic activity showed signs of slowly improving in September and early October. While reports were uneven in many sectors, there continues to be cautious optimism that the recovery is strengthening. Manufacturing activity was improved, with some industries reporting increased sales and optimism.

San Francisco: Reports from contacts indicated some further pickup in economic growth in September. Despite continued increases in demand, many respondents indicated that strong competitive pressures continued to hold down prices and that productivity gains continued to keep hiring at bay. Reports indicated that overall manufacturing activity continued to rise.