Federal Reserve issues first 2005 Beige Book

The Fed’s 10th District, which includes Springfield, reported overall solid expansion, especially in retail sales, factory activity and labor markets. Real estate was not as strong, though, as housing activity slowed slightly and commercial real estate markets generally remained weak.

The district comprises western Missouri, Oklahoma, Kansas, Nebraska, Colorado, Wyoming and northern New Mexico. Information was gathered from late November through early January.

Commercial spending during the holiday season was considered solid, as most stores and mall managers reported favorable year-over-year sales increases. Overall, price discounting was similar to the 2003 holiday season. Sales of jewelry, electronics and other high-end items were reported as being especially strong.

Manufacturing activity continued to strengthen, as most manufacturers reported increased production and orders since the previous survey. Employment also continued to expand at many firms. Most manufacturers also noted some difficulties obtaining materials, especially petroleum-based products, and indicated that they expect those difficulties to continue.

Labor markets continued to show improvement as hiring announcements again outpaced layoffs. Wage and price pressures remained modest, though price pressures did continue in manufacturing. The percentage of companies reporting difficulty finding qualified workers remained similar to recent surveys – up considerably from last year but much lower than five years ago.

Housing activity slowed slightly but is still generally considered solid. Commercial real estate activity was still weak in most areas. Single-family housing starts dropped in many areas but were still above the high levels of the previous year. Overall, home sales were considered flat.

Mortgage demand was down from the previous survey, and lenders anticipate a continued decrease in mortgage demand in the coming months due to lower demand for refinancing.

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