Manufacturing activity continued to expand, with production and new orders rising across most Districts. Demand for nonfinancial services was reported to be stable to modestly increasing overall. Consumer spending was steady to up slightly, but consumers remained price-sensitive, and purchases were mostly limited to necessities and nondiscretionary items. New vehicle sales held steady or rose during the reporting period; sales of used automobiles were strong as well. Activity in the travel and tourism sector picked up.
Housing markets remained weak with most Districts reporting sales below year-ago levels. Reports on prices suggested stability, however. Conditions in the commercial real estate sector were subdued, and construction was expected to remain weak. Lending activity was stable in most Districts. Agricultural conditions were generally favorable, and above-average yields were expected in most reporting Districts. Activity in the energy sector continued to expand.
Input costs, most notably for agricultural commodities and industrial metals, rose further. Shipping rates increased, and retailers in some Districts noted rising wholesale prices. However, prices of final goods and services were mostly stable as higher input costs were not passed on to consumers. Wage pressures were minimal.
In the Third District, business activity has been mixed since the last Beige Book. Manufacturers, on balance, reported slight decreases in shipments and new orders in September. Retailers posted modest year-over-year increases in sales during the back-to-school shopping period. Motor vehicle dealers generally reported steady sales in September and year-over-year gains for the month. Third District banks reported level loan volume outstanding in the past few weeks. Residential real estate agents indicated that sales of existing homes have edged up in the past few weeks, but homebuilders indicated a mostly flat sales pace for new homes. Contacts in the commercial real estate sector said there has been practically no change in market conditions since the last Beige Book. Service-sector firms reported mostly marginal increases in activity in the past month. Business contacts indicated that prices of most goods and services have shown no change, although there were continued reports of rising prices for metals and new reports of increases in lumber prices. Some retailers said there have been increases in some wholesale prices and international freight charges.
Source Beige Book
The outlook among Third District business contacts is positive, on balance, but not robust. Manufacturers forecast a rise in shipments and orders during the next six months. Retailers expect sales to expand slightly through the end of the year. Bankers expect only minimal growth in lending in the near term. Contacts in both residential and commercial real estate expect flat to slowly rising activity into the middle of 2011. Service-sector companies also expect slow growth during the next six months.
Click here for the Federal Reserve October 2010 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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