Fed reports improving economic health for Mississippi districts

The Federal Reserve’s Beige Book for Feb. 29, a periodic assessment of economic health throughout the Reserve Bank’s 12 districts, reported economic activity nationwide continued to increase at a modest to moderate pace from January through February.

Hiring, manufacturing and banking all showed increases. Retail spending and tourism showed gains in some districts. Residential real estate declined in some districts while commercial real estate activity ended the reporting period mixed.

Assessing Mississippi’s economic activity requires a look at the various economic categories in the St. Louis and Atlanta districts.

Northern Mississippi is represented by the St. Louis district while the central and southern parts of the state are represented by the Atlanta district.

For the Atlanta district, Federal Reserve business contacts described economic activity as expanding at a somewhat stronger pace in January and early Febru Sixth District business contacts described economic activity as expanding at a somewhat stronger pace in January and early February compared with late last year.

“Expectations were generally more positive, although firms continued to express caution with regard to the outlook,” The Beige Book reported in its assessment of the Atlanta district.

Retailers noted that sales and traffic increased compared with a year ago and auto sales remained robust. Hospitality contacts, with the exception of cruise lines, reported strong bookings for this year.

Homebuilders and brokers reported that unseasonably warm weather has helped bolster residential real estate activity by pulling some activity forward. Nonetheless, overall home sales and construction levels remained weak apart from the generally robust multifamily sector.

Manufacturers and transportation contacts continued to note positive activity on balance, the Beige Book reported.

“In particular, firms reported increased levels of new orders along with improved expectations for future orders,” the Book said. “Most contacts also signaled that inventory levels have risen in line with these improved order expectations.”

Bankers reported a modest improvement in loan activity at larger institutions.

On the hiring front, more firms reported they added workers, although contacts continued to signal they approached hiring decisions very cautiously. “Concerns over increased input costs generally eased as most firms reported that input prices leveled off. Only a few contacts reported having significant pricing power,” the Feb. 28 report stated.

Contacts in the energy exploration sector noted that recent lease auctions have helped stimulate more industry optimism, contributing to an improvement in investment conditions. Regional gasoline inventories remained above their seasonal norms for this time of year as national and global gasoline consumption remain relatively soft, although contacts reported ongoing concern about the impact of geopolitical uncertainty in some OPEC countries on energy prices going forward.

On the agricultural front, significant rains have eased drought conditions in parts of Alabama, Mississippi, and Louisiana. On a year-over-year basis, prices received by farmers were higher for many of the region’s agricultural products.

Contacts reported that some farmers in Alabama and Georgia were reviewing their planting plans in light of their concerns of labor shortages caused by new immigration identification enforcement laws.

The St. Louis district reports a modest expansion of activity in recent months.

Manufacturing activity in the district has continued to increase, and activity in the services sector has also increased. Residential real estate activity has continued to decline, while commercial real estate market conditions have been mixed. Overall lending at a sample of large district banks saw little change during the fourth quarter of 2011.

Contacts in the St. Louis district reported that retail sales in January and early February rose slightly, on average, over year-earlier levels. Half of the retailers saw increases in sales, while 37 percent saw decreases and 13 percent saw no changes.

Manufacturing activity has continued to increase since the previous report on Jan. 11 Several manufacturers reported plans to open plants and expand operations in the near future, while a smaller number of contacts reported plans to close plants or decrease operations.

Firms in the furniture, automobile, food, stone product, air conditioning component, and medical device manufacturing industries announced plans to increase existing operations and hire new workers. Additionally, firms in the automobile parts and primary metal manufacturing industries announced plans to open new plants and hire workers.

By contrast, companies in the faucet, chemical, paper product, and lawn mower manufacturing industries announced plans to close plants and lay off workers.

Addressing real estate, the report said total home sales dropped 2 percent in Memphis, compared with 2010 and 2011. Contacts in Memphis reported weak commercial real estate loan demand but stable industrial real estate activity.

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