Fed Beige Bk ? St. Louis: Growth at Modest Pace | ForexLive

WASHINGTON (MNI) ? The following is the latest Beige Book?s Eighth
District assessment of economic activity, published Wednesday:

EIGHTH DISTRICT ? ST. LOUIS

Summary

The economy of the Eighth District has continued to expand at a
modest pace since our previous survey. Retail and auto sales in July and
early August increased over year-earlier levels. Residential real estate
market conditions have continued to improve moderately. However,
commercial and industrial real estate conditions have been mixed. Recent
reports of planned activity from services firms have been positive. In
contrast, reports from manufacturing contacts have been mixed. Reports
of lending activity at a sample of large District banks during the
second quarter of 2012 were somewhat mixed.

Consumer Spending

Contacts reported that retail sales in July and early August were
up slightly, on average, over year-earlier levels. About 42 percent of
the retailers reported increases in sales, while 33 percent saw
decreases and 25 percent saw no changes. Half of the retailers noted
that sales levels met their expectations and half noted that sales were
below expectations. About 13 percent of the retailers noted that their
inventories were too high, while 8 percent reported that their
inventories were too low. The sales outlook through the fall was
generally optimistic: 70 percent of the retailers expect sales to
increase over 2011 levels, 17 percent expect sales to decrease, and 13
percent expect sales to be similar to last years sales.

Car dealers in the District reported that sales in July and early
August were up, on average, compared with last year?s sales. About 67
percent of the car dealers surveyed saw increases in sales, while 8
percent saw decreases and 25 percent saw no changes. A third of the car
dealers surveyed noted that new car sales had increased relative to used
car sales, while 13 percent reported the opposite. Roughly 29 percent of
contacts reported an increase in sales of low-end vehicles relative to
high-end vehicles, while about 13 percent reported the opposite.
Twenty-five percent of the car dealers surveyed reported that their
inventories were too low, while 17 percent reported that their
inventories were too high. The sales outlook for September and October
was generally optimistic: 67 percent of the car dealers expect sales to
increase over 2011 levels, 16 percent expect sales to decrease, and 17
percent expect sales to be similar to last year?s sales.

Manufacturing and Other Business Activity

Reports of plans for manufacturing activity have been mixed since
our previous report. Several manufacturers reported plans to expand
operations and hire new workers, while fewer manufacturers reported
plans to lay off workers. However, the reported plans for layoffs
usually involved a greater number of workers relative to the reported
hiring plans. Firms in automobile, medical technology products, carbon
and graphite products, air purification equipment, electrical equipment,
automobile parts, metal can, nanotechnology, lifting equipment, and
industrial machinery manufacturing reported plans to expand operations
and hire new workers. In contrast, firms in air transportation,
chemical, appliance, wind turbine, and aluminum manufacturing reported
plans to lay off workers and close plants.

Reports of planned activity in the District?s service sector have
been positive since our previous report. Firms in financial, medical,
information technology, business support, transportation, home
healthcare, and environmental consulting services reported plans to open
new facilities, expand operations, and hire new employees. In contrast,
firms in information and education services reported plans to reduce
operations and decrease employment.

Real Estate and Construction

Home sales increased throughout most of the Eighth District on a
year-over-year basis. Compared with the same period in 2011, June 2012
year-to-date home sales were up 13 percent in Louisville, 7 percent in
Little Rock, 10 percent in Memphis, and 16 percent in St. Louis.
Residential construction increased in the majority of the District. June
2012 year-to-date single-family housing permits increased in the
majority of the District metro areas compared with the same period in
2011. Permits increased 42 percent in Louisville, 14 percent in Little
Rock, 46 percent in Memphis, and 23 percent in St. Louis.

Commercial and industrial real estate conditions were mixed
throughout most of the District. A contact in northeast Arkansas
reported that except for Jonesboro and Paragould, overall commercial
real estate activity remains weak in the region. A contact in Louisville
noted that compared with the first five months of 2012, the growth of
office leasing activity has slowed. A contact in St. Louis reported
moderate improvement in office real estate activity and strong demand in
the industrial real estate market. Commercial and industrial
construction activity improved throughout most of the District. Contacts
reported several commercial construction projects in Jonesboro,
Arkansas, and in Bowling Green, Kentucky, while contacts in Louisville
noted new speculative construction plans in nearby Jeffersonville,
Indiana.

Banking and Finance

A survey of senior loan officers at a sample of large District
banks indicated moderate changes in overall lending activity in the
second quarter of 2012 compared with the first quarter of 2012. During
this period, credit standards for commercial and industrial loans
remained largely unchanged, while demand for such loans increased
moderately. Credit standards for commercial real estate loans remained
generally unchanged, while demand ranged from moderately weaker to
moderately stronger. Credit standards for prime residential mortgage
loans also remained generally unchanged, while demand ranged from
unchanged to moderately stronger. Credit standards for consumer loans
ranged from basically unchanged to somewhat eased, while demand was
moderately stronger, especially for auto loans.

Agriculture and Natural Resources

Severe drought conditions have caused downgrades to forecasted crop
production. Annual 2012 production of cotton, soybean, and corn in the
District states is expected to fall from 2011 levels by 12 percent, 18
percent, and 24 percent, respectively. In contrast, annual production of
rice and sorghum in the District states is expected to increase by at
least 12 percent. The fraction of all crops rated in fair or better
condition has fallen in all District states since the previous report.
Similarly, the fraction of pasture rated in fair or better condition
declined in all District states. The District states? year-to-date coal
production for the end of July was 3.4 percent higher compared with the
same period last year. Meanwhile, the District states? coal production
for July 2012 was approximately on par with July 2011.

** MNI Washington Bureau: 202-371-2121 **

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Source: http://www.forexlive.com/blog/2012/08/29/fed-beige-bk-st-louis-growth-at-modest-pace/

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