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Jax Daily Record Tuesday, Oct. 22, 201312:00 PM EST

Federal Reserve: A season of expansion

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Could you feel it?

The economy continued to expand from September through early this month, reports the Federal Reserve System, citing reports from its 12 districts in the country.

The Fed reports that national economic activity continued to expand at a modest-to-moderate pace among the districts.

In the Atlanta district, which includes Florida, business contacts described economic activity as expanding slowly in September.

"The outlook among firms remains optimistic as most expect near-term growth to be sustained at or slightly above current levels," said the most recent so-called "Beige Book" of economic activity, which is issued eight times a year.

The Oct. 16 report was based on information collected by Oct. 7 and summarized comments from business and other contacts outside the Federal Reserve.

The Federal Reserve System is the nation's central bank and is based in Washington, D.C. The Federal Reserve Banks consist of 12 regional banks.

The Atlanta district comprises Florida, Georgia, Alabama and parts of Louisiana, Mississippi and Tennessee.

Each Federal Reserve Bank gathers anecdotal information on current economic conditions in its district through reports from bank and branch directors and interviews with business contacts, economists, market experts and other sources.

The 180 industry contacts at the Jacksonville branch are interviewed at least once a year.

In summary, the Beige Book said most retailers in the Atlanta district cited slightly improved levels of spending, and auto dealers continued to experience solid results. Hospitality reports remained largely positive.

Residential brokers and builders continued to witness improvements because sales and prices of new and existing homes increased compared with a year ago, and commercial development picked up slightly, led by multifamily construction.

The report said manufacturers indicated that new orders and production had increased since the last report. Bankers saw higher volumes for both commercial and consumer loans. Payrolls across the region expanded, although at a slower pace than the previous report.

That sounds pretty good, doesn't it?

Depending on your area of business, consider if your experience matched that found by district contacts.

Consumer spending and tourism: Looking better

Consumers continued looking for deals, and retailers responded.

While retailers and fast-food establishments said sales were slightly lower than a year ago, auto dealers reported continued gains. On average, retailers indicated that sales and store traffic were slightly up for the year and are expecting the trend to continue through year-end.

The travel and tourism sector continued to cite healthy demand in leisure travel as hotel bookings, revenue per available room, and attendance at conventions and attractions all increased.

While contacts confirmed a slight increase in hiring, as well as a healthy supply of qualified applicants, they said they were concerned by government cutbacks and softening demand from Europe and China.

Overall, the industry anticipates the same pace of growth for the rest of the year and into early 2014 based on reports of advanced bookings.

Real estate and construction: Improved and improving

Brokers indicated that sales of existing homes were ahead of last year's level, especially in Florida.

By most accounts, inventory levels continued to drop and home prices continued to rise. The sales outlook was positive — half of brokers anticipate sales gains over the next several months.

Homebuilders said new-home sales and construction were ahead of year-earlier levels, although reports indicated new-home sales softened in recent months. The outlook for new-home sales and construction was positive, but had moderated from earlier in the year.

Commercial brokers reported that demand for space improved at a modest pace toward the end of the summer. Construction activity was described as flat to slightly up, with apartment development dominating the optimism.

Contractors said government-related construction slowed while light manufacturing construction picked up. Brokers indicated that most markets were still tenant markets, although rents were up in some areas. The outlook among district commercial real estate contacts remained positive with even more improvements expected for the rest of the year.

Manufacturing and transportation: On the move

Most manufacturers reported that the pace of growth was flat or slightly better in September.

New orders, production, finished inventories, commodity prices and hiring all increased, and auto manufacturers in particular continued to describe solid demand.

A third of regional purchasing managers expect higher production over the next three to six months.

Regional trucking companies reported increases, citing shipments related to housing, autos and energy. Ports continued to report increased activity in the movement of energy products and steel imports, along with more exports of forestry products. Containerized freight growth was mostly even for the year.

Regional railroads reported significant year-to-date declines in the shipment of agricultural products and military equipment, although substantial increases in chemicals and scrap metals offset those drops.

Banking and finance: Increases but concerns

Bankers said they were concerned about interest rate risk because competitors were more willing to extend credit and in some cases were aggressively seeking qualified borrowers. Some contacts said banks seemed to be luring loan business from each other rather than creating new opportunities.

Bankers reported increased activity in owner-occupied commercial real estate, commercial and industrial, manufacturing, small business, and health care lending. Consumer lending, such as mortgages, auto loans and credit cards, was strong in some regions.

Still, mortgage lending overall slowed as interest rates increased and the refinancing boom subsided. Some contacts said residential real estate lending was about evenly split between refinancing and new mortgages.

Employment and prices: Job growth moderating

The district's overall pace of payroll growth slowed somewhat. In July, Florida and Georgia saw greater payroll gains than the district's monthly average for the year, but August's sizable contractions in payrolls in those states brought the pace closer to the monthly average.

The district's unemployment rate was unchanged and slightly higher than the national average. Employers reported they were hesitant to hire because of changes in health care regulations and uncertainty about fiscal policy.

Some employers noted that wages were rising for some high-skilled workers.

As the retail-reliant holiday season approaches, businesses and the Fed continue to look for signs the economy is on a sustainable path of expansion.

And the question remains: Can YOU feel it?

[email protected]

@MathisKb

(904) 356-2466

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