Beige Book reports slowing economic expansion

Retail and auto sales were both down compared to a year ago.

Reports from retailers showed that half of them saw sales decline. A quarter of them said inventories were higher than they’d like, and two-thirds said inventories were at desired levels. Just more than half expect year-end sales to increase from 2006, while about 30 percent said they anticipate decreased sales.

Car dealers, meanwhile, reported that sales in October and early November were down, though sales of used and low-end vehicles are higher than sales of new and high-end vehicles. About a fifth of dealers said their inventories are too high. Most reports showed sales for the remainder of 2007 are expected to be higher than 2006.

The district’s services sector continued to expand, while manufacturing activity softened, according to the report.

Reports from business support services and health care industries show plans to expand operations and hire additional workers.

A high number of manufacturers reported plans to close plants or lay off workers, particularly in the fabricated metals and transportation equipment sectors. Some firms in plastics, furniture, sanitary paper products and chemical, however, reported they would be hiring or expanding plants.

Home sales continued to slow, as did residential construction. Commercial real estate conditions, meanwhile, improved, as industrial and office vacancy rates fell and commercial building permits grew.

Banks throughout the district reported little change in lending activity, according to report. As for agriculture, yield estimates for most crops in the district also stayed about the same.

The Federal Reserve publishes the Beige Book eight times a year and uses it to help determine monetary policies.