Current Economic Conditions by Federal Reserve District
Reports from the twelve Federal Reserve Districts suggest that national economic activity continued to expand at a modest to moderate pace during the reporting period of early July through late August. Eight Districts characterized growth as moderate; of the remaining four, Boston, Atlanta, and San Francisco reported modest growth, and Chicago indicated activity had improved. Consumer spending rose in most Districts, reflecting, in part, strong demand for automobiles and housing-related goods. Activity in the travel and tourism sector expanded in most areas. Demand for nonfinancial services, including professional and transportation services, increased slightly on net. Manufacturing activity expanded modestly. Residential real estate activity increased moderately in most Districts, and demand for nonresidential real estate gained overall. Lending activity was mixed. Lending standards were largely unchanged, while credit quality improved. Demand for agricultural products was strong during the reporting period, but growing conditions and production in some areas were somewhat weak as a consequence of extreme weather. Demand for natural resource products was stable or up slightly, and extraction increased in anticipation of further demand growth.
For most occupations and industries, hiring held steady or increased modestly relative to the prior reporting period. Upward price pressures remained subdued, and prices increased slightly during the reporting period. Wage pressures continued to be modest overall.
Commercial Real Estate
Demand for nonresidential real estate increased. Office vacancy rates and other indicators in markets for office space improved modestly in the major metropolitan markets in the New York, Richmond, and St. Louis and Districts. Rents for Class B office space in Manhattan have risen more than 10 percent over the past twelve months. Demand for commercial real estate showed strong growth in the Dallas District and moderate growth in the Minneapolis District. Both Districts reported new plans for construction of industrial space. Philadelphia, Cleveland, Richmond, Atlanta, Chicago, Kansas City, and San Francisco reported modest growth in demand for commercial real estate. Philadelphia highlighted a shift in recent leasing activity toward larger commercial spaces. The Boston, Philadelphia, Cleveland, Atlanta, Dallas, and San Francisco Districts all reported increases in construction of multifamily residential properties.
Dallas Beige Book
The Eleventh District economy expanded at a moderate pace over the past six weeks. While many respondents noted steady demand, there were more noting improving versus declining demand. Sales grew for firms in residential construction, retail, accounting, fabricated metals, food and kindred products, and automobile dealerships. Financial firms and paper producers reported a decline in demand. The energy sector noted some flattening of activity at high levels. Drought continued to plague the region although recent rains have slightly improved growing conditions in some areas.
Construction and Real Estate
Single-family housing activity remained strong over the past six weeks according to contacts. Most responding firms noted that new home construction has increased in response to robust sales, especially in the Houston, Dallas and Austin metro areas. Some contacts expressed concern about the high level of multi-family construction in major Texas metros, but overall apartment occupancy rates improved since the last report. Contacts are mostly optimistic in their forecasts through year-end.
Office and industrial construction was reportedly rising, with several announced projects in the Dallas/Fort Worth and Houston areas. Overall, Texas commercial real estate markets continue to fare well compared to other parts of the U.S. Contacts noted moderate to strong growth in rental rates in most commercial real estate sectors as leasing activity has increased.