Most Districts reported sluggish retail activity. Cleveland, Richmond, and Minneapolis noted further declines in sales, although results were somewhat mixed or positive according to retailers in the Boston, Philadelphia, St. Louis, Kansas City, and San Francisco Districts. Manufacturing activity showed some improvement in the Richmond, Chicago, and Kansas City Districts; while St. Louis and Dallas reported some moderation of declines; Philadelphia and Minneapolis saw activity decrease; and most other Districts indicated that manufacturing activity continued at low levels. Boston, Richmond, St. Louis, Minneapolis, and San Francisco reported contractions in services industries. Banking sectors in the New York, Cleveland, Richmond, St. Louis, Kansas City, and San Francisco Districts experienced weaker demand for some categories of loans. Residential real estate markets stayed soft in most Districts, although many noted some signs of improvement. By contrast, commercial real estate markets weakened further in recent months in two-thirds of the Districts and remained slow in the others.
Districts reported varied--but generally modest--price changes across sectors and products, with competitive pressures damping increases; however, Boston, Cleveland, Chicago, Minneapolis, and Dallas noted that some metals prices have increased in recent months. Most Districts indicated that labor markets were extremely soft, with minimal wage pressures, and cited the use of various methods of reducing compensation in addition to, or instead of, freezing or cutting wages.
In the Philadelphia (Third District) region, economic conditions remained subdued in July. Manufacturers, on balance, reported declines in shipments and new orders. Retailers gave mixed reports, although sales were not strong overall. Motor vehicle dealers indicated that sales of new vehicles were slow. Bank loan volume has increased slightly. Credit quality has continued to deteriorate. Residential real estate sales increased in June and July as pent-up demand and seasonal factors boosted sales, according to local real estate agents, but the sales rate remained below the year-ago pace. Nonresidential real estate investment, leasing, and construction activity continued to be slow. Business firms in the region reported level or falling input costs and output prices in July.
The outlook in the Third District business community was slightly more positive in July than at the time of the previous Beige Book, although most contacts see little prospect of strong improvement in the immediate future. Manufacturers forecast a rise in shipments and orders during the next six months. Retailers expect sales to gain strength slowly, but auto dealers expect sales to remain slow for the rest of the year. Bankers anticipate demand for credit to remain limited until overall economic conditions improve, and they expect further weakening in credit quality as well. Residential real estate contacts believe housing demand is stabilizing, although they say a substantial increase in sales is not imminent. Contacts in nonresidential real estate expect leasing and purchase activity to remain weak during the rest of this year and perhaps move up early next year.
Source Beige Book
Click here for the Federal Reserve July 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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