Beige Book: Expect growth in manufacturing, services

In the eighth district, which includes parts of Missouri, Kentucky, Tennessee, Illinois, Indiana and Mississippi, and all of Arkansas, reports from the manufacturing sector remained positive. Firms in the biofuel and fabricated metal product industries, specifically, reported plans to add new facilities, with contacts in machinery, food, furniture and miscellaneous industries also indicating upcoming expansion. In the motor-vehicle-parts area of manufacturing, however, there were reports of plans to lay off workers and to decrease operations. Also, at least one in the computer equipment industry indicated plans to close.

Services

The report shows continued growth in the services sector. Firms in freight, transportation, recreation and professional business services reported plans to expand operations. On the downside, a business support firm reported plans to close, and car dealers within the district reported decreased sales from late August through early September on average compared to the same period a year ago. In particular, sales of domestics and sport-utility vehicles were slow.

Real estate, construction

Year-to-date home sales results as of August were mixed throughout the district, where residential construction remained weak. Commercial real estate conditions also were mixed, though in some areas the vacancy rate of downtown office space decreased and demand was high for Class A office space.

Banking

In the banking and finance sector, total loans outstanding at a sample of small- and mid-size banks showed a slight increase of 0.6 percent from mid-June to the end of August. Real estate lending, which accounts for 71.9 percent of total loans, increased 0.4 percent. Commercial and industrial loans, which account for 18 percent of total loans, increased 1.1 percent, while loans to individuals, comprising 4.3 percent of total loans, fell 0.7 percent. All other loans, roughly 5.8 percent of total loans, increased 1.8 percent, and total deposits at the sample banks increased 1.4 percent.