Federal Reserve Beige Book Report April 2009 Report

Reports from the Federal Reserve Banks indicate that overall economic activity contracted further or remained weak. However, five of the twelve Districts noted a moderation in the pace of decline, and several saw signs that activity in some sectors was stabilizing at a low level.

Manufacturing activity weakened across a broad range of industries in most Districts, with only a few exceptions. Nonfinancial service activity continued to contract across Districts. Retail spending remained sluggish, although some Districts noted a slight improvement in sales compared with the previous reporting period. Residential real estate markets continued to be weak. Home prices and construction were still falling in most areas, but better-than-expected buyer traffic led to a scattered pickup in sales in a number of Districts. Nonresidential real estate conditions continued to deteriorate. Difficulty obtaining commercial real estate financing was constraining construction and investment activity. Spending on business travel declined as corporations cut back. Reports on tourism were mixed. Bankers reported tight credit conditions, rising delinquencies, and some deterioration of loan quality.

Agricultural conditions were generally favorable across Districts, although drought conditions persisted in the Dallas and San Francisco Districts. The Districts reporting on energy said reduced demand, high inventories, and lower prices led to steep cutbacks in oil and natural gas drilling and production activity. The Minneapolis, Kansas City, and Dallas Districts noted declines in employment in the oil and gas extraction industry.

Downward pressure on prices was reported across Districts. Wage and salary pressures eased as labor markets weakened in all Districts, and many contacts continued to report job cuts and wage and hiring freezes. Employment continued to decline across a range of industries, with only scattered reports of hiring.

In the Philadelphia (Third District) region, economic activity continued at a slow rate in March. Manufacturers, on balance, reported declines in shipments and new orders. Retailers indicated that sales were nearly steady but well below the level of a year ago. Motor vehicle dealers reported a nearly steady but low rate of sales during the month. Bank loan volume has been flat in recent weeks, and credit quality has continued to deteriorate. Residential real estate sales were slow but appeared to be close to steady. Nonresidential real estate investment and construction activity continued to decline. Service-sector activity has been generally slow in recent weeks. Business firms in the region reported level or falling input costs and output prices in March.

The outlook in most industries in the Third District is subdued. Manufacturers forecast some gains in shipments and orders during the next six months, but little improvement is expected in other sectors. Retailers expect sales to remain near the current pace through spring, and auto dealers expect sales to remain around the current rate for most of the rest of the year. Bankers anticipate little growth in lending until both business and consumer confidence is restored. Residential real estate agents and home builders expect sales to remain near the current rate or to pick up slightly through the spring and summer. Contacts in nonresidential real estate expect leasing and purchase activity to remain weak through the rest of the year. Service-sector firms expect activity to be slow during the next few months, at least.

Source Beige Book

Click here for the Federal Reserve April 2009 Beige Book [Beige Book Archives]


See related blog articles:
Federal Reserve Beige Book For Economic Conditions (What is the "Beige Book"?)
The Federal Reserve - Making Sense In Plain English

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