Federal Reserve Districts Report Economic Growth Moderating

Informal soundings of regional business conditions from the 12 Federal Reserve districts as summarized last week in the latest Beige Book "indicated that economic activity continued to grow; however, the pace has moderated in many districts.

"Increasing inventories of unsold homes in the Boston, New York, and Kansas City districts (the Fed refers to its districts by the name of the headquarters cities) have restrained building in the single-family housing sector. Residential construction activity overall was mixed, though it increased in the Minneapolis district. Since the previous Beige Book, construction and activity in the residential rental market have continued to improve in the New York, Chicago, Dallas, and San Francisco districts.

Nonresidential real estate activity improved somewhat in the Boston, Philadelphia, Cleveland, Chicago, St. Louis, and Dallas districts. The Chicago district reported strong demand for industrial facilities, particularly from the automotive sector. The Philadelphia district reported improvements in terms of lower vacancy rates for office space, industrial space, and apartments; the Chicago district reported generally lower vacancy rates. The New York, Richmond, Atlanta, Minneapolis, Kansas City, and San Francisco districts all reported generally weak activity in nonresidential real estate.

"Construction in the Minneapolis district stalled in areas because of flooding and unavailability of state building inspectors due to the Minnesota state government shutdown. Health care and apartment construction was a bright spot for the Atlanta district. Activity was weak in the Kansas City district, but firms that supply construction materials reported increased sales and stable prices. San Francisco reported stable but high vacancy rates in many parts of the district."

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