Summary of Current Economic Conditions by Federal Reserve District
Reports from the twelve Federal Reserve Districts indicate that overall economic activity continued to increase at a modest to moderate pace since the previous survey. Manufacturing expanded in most Districts since the previous report, with many Districts reporting increases in new orders, shipments, or production. Most Districts noted that overall consumer spending and auto sales increased during the reporting period. Activity in a wide variety of nonfinancial services was stable or increased in most reporting Districts. Transportation was stable or increased in several Districts. Tourism remained strong in some reporting Districts, although several Districts noted softness from bad weather. Residential real estate and construction activity increased at a moderate to strong pace in all reporting Districts. Commercial real estate market conditions and construction continued to improve across the Districts. Banking conditions generally improved across the Districts. Credit quality improved, while credit standards remained largely unchanged.
Commercial Real Estate and Construction
Commercial real estate market conditions continued to improve across most Districts. New York, Philadelphia, Cleveland, Atlanta, Chicago, St. Louis, Minneapolis, and San Francisco reported modest to moderate improvements in nonresidential real estate activity. Dallas reported strong growth in leasing activity for office and industrial space. Boston and Richmond reported that commercial real estate conditions were holding steady or improving, depending on location. Nonresidential construction activity was stable or increased throughout the nation. Philadelphia, Atlanta, and Richmond reported that commercial construction was flat to slightly up, while Cleveland, Chicago, St. Louis, Minneapolis, and Dallas noted improvements in commercial construction.
The Eleventh District economy generally expanded at a slightly stronger pace over the past six weeks than during the previous reporting period. Manufacturing activity increased somewhat overall, with stronger reports from metals and petrochemical producers. However, retail sales were flat after rising in the previous six weeks, and auto sales softened slightly. Nonfinancial services firms noted a continued rise in activity, and demand for accounting services grew at a stronger pace. The housing sector continued to improve, with a rise in new construction. Office and industrial leasing activity remained strong. Financial institutions noted growth in loan demand was stronger than six weeks ago, and energy activity remained at high levels. Drought continued to dampen the agricultural sector. Prices held steady at most Eleventh District reporting firms, and employment levels were flat overall with scattered reports of hiring.
Construction and Real Estate
Activity in the housing sector continued to grow at a strong pace over the reporting period. Single-family home sales continued to outpace supply, leading to very low inventories and rapid price increases. Building activity picked up but was not yet able to meet demand in the major metro areas. Slightly higher mortgage rates are not expected to derail demand, according to most contacts. Apartment demand remained at high levels. Apartment construction rose in the major metros, where occupancies were above 90 percent.
Leasing activity for office and industrial space was strong over the past six weeks, particularly in Houston and Dallas. Construction activity picked up in both Houston and Dallas, with numerous office and industrial projects underway. Contacts noted that the recent increase in interest rates has caused concern in the commercial investment markets, although the impact has been minimal so far