The 2020 Mid-Year Economic Update_long

Federal Reserve: Economy Continues Expansion

Manufacturing generally increased, although the rate of growth varied.

Reports from the 12 Federal Reserve Districts indicate that economic activity continued to expand across most regions and sectors from early January through mid-February, according to the Federal Reserve Beige Book.

Six districts noted that the local economy expanded at a moderate pace since the prior reporting period. Activity rose modestly in Philadelphia and Cleveland, while it increased slightly in Kansas City. Dallas noted a similar pace of growth as in the previous period, while Richmond reported that activity slowed from the modest pace seen in the prior period. Boston noted that business contacts were fairly upbeat this period, notwithstanding the severe weather.

Manufacturing generally increased since the previous survey, although the rate of growth varied across the districts and sectors. The Atlanta district noted that manufacturing rebounded during the current reporting period following a modest slowdown in December. According to contacts in the Chicago and San Francisco, manufacturing rose moderately, while contacts in New York noted modest gains. Contacts in Kansas City indicated slow growth, contacts in Philadelphia reported slight increases, and contacts in Dallas noted flat to positive growth.

Reports from factory contacts in Cleveland district were mixed, while contacts in Richmond noted that activity weakened. Manufacturers had generally positive outlooks going forward. Firms in Atlanta expect production levels to increase over the next three to six months, some firms in Chicago expect steady growth in shipments for 2015. Manufacturers in Boston, Cleveland, and Richmond reported positive outlooks. In contrast, New York district contacts have grown less optimistic about the near-term outlook.

The demand for nonfinancial services also grew moderately on balance. Home sales increased in most districts, while reports on residential construction were mixed. Commercial real estate market conditions remained stable or improved across the districts. Banking conditions generally improved, and credit quality remained largely unchanged. Agricultural conditions generally worsened, and oil and natural gas drilling declined.

Residential real estate conditions were mixed across the districts. Home sales and prices increased in most districts; construction activity was mixed, with some districts reporting disruptions due to severe weather. Commercial construction increased in most districts. Contacts in New York, Richmond, Atlanta, St. Louis, and San Francisco noted stable to strong multifamily construction. Contacts in Chicago reported moderate growth in commercial real estate, driven mainly by industrial buildings. In Boston, contacts noted that speculative construction remains limited due to high construction costs.

Employment levels remained stable or continued to grow in most districts and across a variety of sectors. Contacts in several districts noted strong labor demand and challenges filling a variety of skilled positions.

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