On November 29, 2017, the Federal Reserve published its
latest edition of the Beige
Book. The report is published eight times per year and summarizes anecdotal
information on current economic conditions in the Federal Reserve’s 12
Districts gathered through reports from Bank and Branch directors and
interviews with key business contacts, economists, market experts, and other
sources.
Below are excerpts from the Sixth Federal Reserve
District’s report, which includes Alabama, Florida, and Georgia, and portions
of Louisiana, Mississippi, and Tennessee, followed by a summary for the Fifth Federal Reserve District. For purposes of this story, I have italicized direct quotes from the
report.
In summary, the Sixth District reported that economic conditions modestly improved since
the previous report. Tightness in the labor market persisted and wages grew
modestly. Non-labor costs remained little changed. Retail sales increased
across most of the District. Tourism activity was mostly positive. Home sales
were flat to down, and home prices improved slightly. Manufacturers indicated
that activity modestly increased. Credit was available.
For the nation as a whole, the Bank reports that economic activity continued to increase at a
modest to moderate pace in October and mid-November, according to anecdotal
reports from contacts across the 12 Federal Reserve Districts. There was a
slight improvement in the outlook among contacts in reporting Districts.
Conditions in the Southeast (Sixth District)
Most businesses
continue to expect slow and steady growth for the remainder of the year.
District firms continued to describe a tight labor market as many faced
difficulty [sic] finding workers.
Wage growth remained modest. On balance, nonlabor input costs were stable.
Retail sales, including auto, increased across most of the District. Reports
from the hospitality sector were mostly positive. Residential real estate
contacts noted that home sales were flat to down, although home prices improved
modestly from the previous report. Commercial real estate contacts continued to
report that the pace of construction had picked up from a year ago.
Manufacturers indicated that activity grew at a modest pace since the previous
report. Bankers reported that ample credit was available.
In a survey of
business contacts, most respondents indicated that they planned to increase
employment over the next 12 months as a result of expected sales growth, a need
for skills not possessed by current staff, and to mitigate concerns about
current staff being overworked. The top factors restraining hiring plans were challenges
finding workers with required skills and a desire to keep operating costs low.
Amidst these challenges, in an effort to attract workers, most respondents
reported that they raised wages, signing bonuses, or total compensation
offered.
Georgia and
Louisiana contacts reported continued growth in business, leisure, and group
travel.
Banking and Finance
Credit remained readily available for most qualified borrowers, although some contacts faced challenges obtaining financing for long-term residential developments. Credit tightened somewhat for energy-related industries. Liquidity was plentiful, but some banking contacts reported pressure to increase deposit rates. Some bankers noted increased competition for loans.
Credit remained readily available for most qualified borrowers, although some contacts faced challenges obtaining financing for long-term residential developments. Credit tightened somewhat for energy-related industries. Liquidity was plentiful, but some banking contacts reported pressure to increase deposit rates. Some bankers noted increased competition for loans.
Energy
Overall, energy contacts reported a steady pace of activity. They noted that the new natural gas pipeline capacity that came online was facilitating the demand for export of liquid natural gas. Both crude oil and gasoline inventories continued to decrease; however, levels were higher than the average range. Contacts reported that industrial and commercial utility usage remained flat. Broadly, utility contacts indicated they are preparing for a colder winter than the previous year.
Overall, energy contacts reported a steady pace of activity. They noted that the new natural gas pipeline capacity that came online was facilitating the demand for export of liquid natural gas. Both crude oil and gasoline inventories continued to decrease; however, levels were higher than the average range. Contacts reported that industrial and commercial utility usage remained flat. Broadly, utility contacts indicated they are preparing for a colder winter than the previous year.
Conditions in other southeastern states (Fifth District)
Not all southeastern states are located in the Federal
Reserve’s Sixth District. The Fifth District includes the states of Maryland,
Virginia, North Carolina, and South Carolina; 49 counties constituting most of
West Virginia; and the District of Columbia.
Summary of
Economic Activity in the Fifth District
The Fifth District economy grew at a moderate rate since our last Beige Book report. Manufacturers noted a moderate rise in new orders and shipments, and they generally expected strong growth over the next six months. District ports continued to see high volumes, particularly for imports. Trucking firms reported robust growth, in part due to relief shipments being sent to hurricane-affected areas. Retailers were optimistic ahead of the holiday shopping season. Tourism remained robust as mild weather helped boost activity. Residential home sales rose modestly and the inventory of houses for sale remained low. Commercial real estate leasing increased moderately. Residential loan demand was little changed in recent weeks, while commercial, small business, and agriculture lending picked up. Nonfinancial services firms reported moderate revenue growth. The demand for labor increased moderately in recent weeks while wage increases remained modest. Prices continued to grow at a modest pace.
Banking and Finance
On the whole, loan demand increased modestly since our previous report. Residential mortgage demand was generally characterized as stable. A lender in Virginia reported an increase in mortgage loans, but attributed it to more advertising and concessions on closing costs. Meanwhile, a banker in North Carolina said the low inventory of homes for sale was restraining mortgage loan growth. Commercial lending activity rose moderately in recent weeks. A banker in Baltimore saw an increase in commercial real estate lending for multi-family and senior housing facilities. Small business and agriculture lending rose modestly, according to contacts in Virginia and North Carolina. On balance, interest rates and net interest margins increased slightly in recent weeks. Credit quality remained strong while credit standards were generally unchanged.
On the whole, loan demand increased modestly since our previous report. Residential mortgage demand was generally characterized as stable. A lender in Virginia reported an increase in mortgage loans, but attributed it to more advertising and concessions on closing costs. Meanwhile, a banker in North Carolina said the low inventory of homes for sale was restraining mortgage loan growth. Commercial lending activity rose moderately in recent weeks. A banker in Baltimore saw an increase in commercial real estate lending for multi-family and senior housing facilities. Small business and agriculture lending rose modestly, according to contacts in Virginia and North Carolina. On balance, interest rates and net interest margins increased slightly in recent weeks. Credit quality remained strong while credit standards were generally unchanged.
The Beige Book is a summary of interviews conducted with
business contacts before each meeting of the Fed's monetary policymaking
Federal Open Market Committee (FOMC). The next FOMC meeting will be held December 12 and 13.
