Reports from the 12 Federal Reserve Districts suggest overall economic activity expanded during the reporting period from early April to late May, according to the Federal Reserve Beige Book.
Activity in the Richmond, Chicago, Minneapolis and San Francisco districts was characterized as growing at a moderate pace, while the New York, Philadelphia, and St. Louis districts cited modest growth. Contacts in the Boston district reported mixed conditions, and the Cleveland and Kansas City districts indicated a slight pace of expansion. Compared to the previous report, the pace of growth slowed slightly in the Dallas district but held steady in the Atlanta district. Outlooks among respondents were generally optimistic, with growth expected to continue at a modest to moderate pace in several districts.
Manufacturing was mostly flat to up over the reporting period, except for in the Dallas district where it was steady to slightly weaker and in the Kansas City district where it declined sharply. Growth was moderate in the Boston, Atlanta, Chicago and St. Louis districts. The Philadelphia district reported slight growth, while factory activity was mostly flat in the New York, Cleveland, Richmond, San Francisco and Minneapolis districts.
Demand for nonfinancial services increased, and staffing firms reported steady or higher activity. Port activity was strong in the Richmond, Atlanta, and Dallas Districts, but reports on other freight and transportation services activity were mixed. Most districts said residential and commercial real estate activity and construction improved since the last report. Home prices continued rising and low home inventories continued to constrain sales activity in some areas of the country. Overall loan demand increased, with particular strength noted in the New York District. Credit quality and delinquency rates were stable or improved. Credit standards were mostly unchanged, except for scattered reports of easing in the Philadelphia, St. Louis, Atlanta and San Francisco Districts.
The agricultural sector improved as significant rainfall alleviated the dry spell or improved growing conditions in several districts. However, drought conditions persisted in the San Francisco District and the outbreak of the avian flu severely impacted poultry producers in the Chicago and Minneapolis Districts. Oil and natural gas activity continued to decline in most districts, except for Cleveland where the rig count leveled off. Coal production was flat to down.
Residential real estate activity and construction expanded in most districts since the prior report, and outlooks were largely positive. Homes sales rose strongly in the Minneapolis district on a year-over-year basis, while more modest to moderate gains were reported by all of the remaining districts, except for Philadelphia where builders reported mixed conditions for new vi home sales and brokers noted slightly slower existing-home sales in April on a year-over-year basis.
Employment levels were up slightly over the reporting period, with some reports of layoffs. Wages rose slightly. Prices were stable or ticked up, although manufacturers in some districts cited lower input prices.
