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Beige Book Indicates Economic Growth in St. Louis District

2 min read

Economic activity in the St. Louis District has continued to increase at a moderate pace since the previous “Beige Book” in July and year-over-year home sales in June increased 7 percent in Little Rock.

The Federal Reserve’s latest survey of business conditions, called the Beige Book, was released Wednesday. It details economic conditions in the Fed’s 12 districts.

A survey of businesses in the St. Louis District, which includes all of Arkansas and parts of Illinois, Indiana, Kentucky, Mississippi, Missouri and Tennessee, indicated that wage growth was moderate while employment growth was modest.

Consumer Spending

Most retailers reported sales at or above 2014 levels in the most recent quarter. But many of these contacts indicated that sales fell short of their expectations. Still, the majority of respondents have a somewhat optimistic outlook.

The majority of auto dealer contacts indicated an increase in sales since the beginning of July compared with the same period last year, and many expect the trend to continue through the fourth quarter. Some noted that low gas prices continue to have a positive impact on demand.

Manufacturing and Other Business Activity

New orders were unchanged on net, with reports of increased orders offset by an equal number of reports of decreased orders.

Reports from the service sector contacts have also been mixed since the previous report. Several firms that provide healthcare, food, and accommodation services reported new hiring and expansion plans in district states.

Real Estate and Construction

Residential real estate activity continued to expand at a steady pace. June monthly single-family building permits increased 34 percent in Little Rock, 12 percent in Louisville, and 7 percent in St. Louis, while permits decreased 19 percent in Memphis. There was an increase in speculative retail areas in Little Rock, catering to smaller build-to-suit retailers and restaurants.

Banking and Finance

A survey of district banks showed improvement in overall lending activity over the past three months. Loan demand was stronger, especially for residential mortgage and commercial and industrial loans.

Loan delinquencies were lower for all loan types.

Agriculture and Natural Resources

Conditions deteriorated slightly for corn and soybeans but improved for cotton and rice. In contrast, since our previous report, there was a slight increase in the percent of the district cotton and rice crops rated in good or excellent condition. Most of the improvement for the district cotton crop was driven by an improvement in Tennessee. Year-to-date coal production is 5.2 percent lower than at the same time last year.

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