The U.S. Federal Reserve's periodic report on economic activity showed a mixed picture with moderate growth nationwide, but with spots of weakness and widespread signs that growth was slowing from the preceding periods. Economic growth at a modest pace was the most common characterization of overall conditions in the five western Fed districts of St. Louis, Minneapolis, Kansas City, Dallas and San Francisco. Reports from Boston and Cleveland also pointed to positive developments or net improvements compared with the previous reporting period, but New York, Philadelphia, Richmond, Atlanta and Chicago all reported mixed conditions or deceleration in overall economic activity.
The latest “Beige Book” report is based on information gathered from mid-July through the end of August.
Consumer spending appeared to increase on balance despite continued caution that limited nonessential purchases, while activity in the travel and tourism sector picked up relative to seasonal norms. Activity was largely stable or up slightly for professional and other nonfinancial services. Reports on manufacturing activity pointed to further expansion, although the pace of growth eased according to several districts. Agricultural producers and extractors of natural resources reported continued gains in demand and sales. Home sales slowed further following an initial drop after the expiration of the homebuyer tax credit at the end of June, prompting a slowdown in construction activity as well. Demand for commercial real estate remained quite weak but showed signs of stabilization in some areas. Reports from financial institutions pointed to generally stable or slightly lower loan demand and noted some modest improvements in credit quality.
Manufacturing activity expanded further on balance, although the pace of growth appeared to be slower than earlier in the year, the Fed said. Most districts reported further gains in production activity and sales across a broad spectrum of manufacturing industries, though New York, Richmond, Atlanta and Chicago noted that the overall pace of growth slowed, while Philadelphia, Cleveland and Kansas City reported that demand softened compared with the previous reporting period. Recent weakness was most notable for construction-related products.
Activity in residential real estate markets continued to decline. Demand for commercial, industrial and retail space generally remained depressed. High vacancies and negative absorption held nonresidential construction activity to the bare minimum in most districts. Cleveland was an exception, noting that improved construction for industrial use and educational infrastructure had raised overall activity above year-earlier levels and prompted modest hiring by builders.