Fed's Beige Book shows mixed, modest growth in Eighth District

The Federal Reserve's Sept. 3 Beige Book for the Eighth District, which includes Springfield, reported an overall modest increase for the last three months, though the sources of that growth was mixed.

Leading the way was growth in manufacturing and services, as well as a brighter retail environment. Lending activity was flat to slightly increased, wages and employment levels grew by a medium amount, prices improved moderately, but the real estate market ultimately remained weak or mixed, according to the Fed's report.

The Beige Book, published eight times a year, summarizes anecdotal information on current economic conditions and is separated into 12 districts.

Manufacturing and services
Several manufacturers - particularly producers of steel, pet food, plastics, lighting products, consumer goods and industrial appliances - reported plans to add workers, expand operations or open new facilities in the Eighth District, according to the report.

In contrast, manufacturers of tools and light machinery reported plans to lay off workers and close facilities, while auto parts manufacturers were mixed in their plans.

The service sector - including health care, finance, retail, transportation and telecommunications - reported new hiring and expansion plans. Other service firms, such as food, information technology and news media services, said they would lay off employees, according to the Fed.

Consumer spending
About 40 percent of retailers surveyed for the Beige Book anticipated third-quarter sales to be flat from a year ago, while 40 percent expected higher sales. The majority believe sales will meet or exceed expectations.

Auto dealers, too, anticipate third-quarter gains. Roughly half of dealers surveyed expected similar sales compared to a year ago, while the other half anticipate higher sales.

Real estate and construction
Eighth District residential sales were down compared to a year ago, while the commercial and industrial markets were mixed, according to the report.

Through July, year-to-date home sales were down 4 percent in St. Louis, 6 percent in Memphis, Tenn., 4 percent in Little Rock, Ark., and 3 percent in Louisville, Ky.

Single-family housing permits decreased in the majority of the district's metro areas compared to the same period in 2013.

Commercial and industrial real estate market conditions in St. Louis showed an increase in demand for office space and a small supply of commercial real estate space available. Memphis contacts reported stable office vacancy rates and a decrease in retail and industrial vacancies rates; at least one contact in Little Rock reported new facility construction; and Louisville respondents said office space demand downtown was weak, according to the report.

Banking and finance
Commercial and industrial loans have been in higher demand, according to survey respondents.

Elsewhere in the industry, credit standards for residential mortgage loans were largely unchanged, credit card standards and creditworthiness was flat and credit standards for auto loans eased slightly, according to the report.

Employment, wages and prices
During the past three months, Eighth District businesses indicated employment levels and wages grew at a modest pace, while prices also increased moderately from a year ago.

Of respondents, 61 percent said employment levels were the same from a year ago, while 31 percent reported slightly increases and 8 percent recorded slight decreases.

In wages, 60 percent of contacts said they were flat, 37 percent said they increased moderately and 2 percent showed a decrease, according to the Fed.