Beige Book reports higher consumer spending

The Federal Reserve's March Beige Book shows economic activity in the reserve's Eighth District, which includes Springfield, expanded modestly since the last report released in January, specifically in the services, retail and automobile sales sectors.

The March Beige Book is split into five categories: consumer spending; manufacturing and other business activity; real estate and construction; banking and finance; and agriculture and natural resources.

Consumer spending
Retailers in the district reported January and February average sales were up year-to-date. Half of the respondents experienced increases in sales, 25 percent recorded decreases and 25 percent were flat. About 58 percent of the retailers noted expectations of increased sales in 2011.

Car dealers also reported higher average sales in January and early February compared to sales at the same time last year. About 71 percent of respondents said sales increased, while 12 percent reported decreases. Nearly 92 percent of the car dealers sampled expect sales to increase this year compared to 2010 levels.

Manufacturing and other business activity
Manufacturing activity decreased since the last Beige Book report. Several manufacturers reported plans to close plants and reduce operations, and a smaller number of respondents reported plans to open plants or expand operations. Wood products, automobile parts, aircraft and primary metal manufacturing firms reported plans to decrease operations and lay off workers, while medical equipment, automobile parts and primary metal manufacturing firms reported plans to increase operations and hire new employees.

The services sector showed continual improvement. Legal services, commercial printing, entertainment, support activities for air transportation, and business support industries contacts reported plans to expand and hire employees. Other services industries, government services and religious organizations, reported plans to decrease operations and lay off workers.

Real estate and construction
Home sales continued to decline throughout the district. January 2011 home sales were down 1 percent in St. Louis compared to the same period in 2010, and they dropped 6 percent in Louisville, Ky., and Little Rock, Ark., and 8 percent in Memphis, Tenn. Real estate activity, in general, remained soft, with slow commercial and industrial construction activity and low demand for new development projects.

Banking and finance
Fourth-quarter 2010 results for large banks in the district showed little change in overall lending. Credit standards for commercial and industrial loans remained unchanged, while demand for the loans were either unchanged or moderately weaker. In general, credit standards for loans were unchanged or slightly tightened.

Agriculture and natural resources
Annual figures for 2010 showed the district's agricultural sector suffered a shortfall of 2 percent or more in corn, soybean, rice, hay and tobacco yields, compared to the previous year. Cotton and winter wheat yields rose by 2 percent or more. Total production in 2010 of corn, soybeans, sorghum, winter wheat, hay and tobacco decreased 4 percent compared to 2009. Total production of rice, however, increased 18 percent, and total production of cotton increased 50 percent. Coal production at the end of January 2011 was 7 percent higher than a year ago.

The Beige Book, released eight times a year, summarizes anecdotal information on current economic conditions and is separated into 12 districts.[[In-content Ad]]