Beige Book shows positive signs for 2005

Manufacturing
Manufacturing activity in the region continued its solid expansion. Overall, plant managers reported increases in production, shipments and orders compared with the previous survey, and most firms said activity was stronger than it was a year ago. Employment at those plants remained unchanged from the previous survey after rising steadily during the past year.
A number of manufacturers reported difficulty obtaining materials, especially those transported by rail. Those difficulties are expected to persist and possibly
worsen.

Spending
Consumer spending in the district rose modestly in late January and February. Retailers and mall managers generally reported that sales were up slightly from 2004’s levels. Apparel sales were generally characterized as especially strong, due in part to post-holiday discounting.
One negative in consumer activity was the motor vehicle sector, which reported slightly lower sales figures compared to the previous survey and to year-ago levels.

Construction
Residential construction continued to slow, but home sales rose slightly and commercial real estate showed modest signs of improvement.
Builders generally reported that single-family housing starts were down slightly from the previous survey but still close to year-ago levels.

Oil
District energy activity increased slightly from already high levels.
The count of active oil and gas drilling rigs in the region edged up from the
previous survey and was well above year-ago levels. Most of those surveyed expect continued modest expansion of drilling in the months ahead, as oil and gas prices are expected to remain high.

Labor
Wage pressures increased slightly due to a firming labor market, and price pressures continued on the wholesale level. Labor markets showed further improvement, with hiring announcements outpacing layoffs.
However, many energy firms and some manufacturers reported increasing difficulties finding skilled workers, resulting in some modest increases in wage pressures in those industries.
Issued eight times a year, the Beige Book is a collection of anecdotal information compiled primarily from various business and community leaders, who provide information confidentially.
Although it is not an in-depth report, the Fed uses the Beige Book as one of many tools to help determine the direction of monetary policy.
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