WASHINGTON (7/18/13)--The U.S. economy continued to increase at a "modest to moderate pace" in the past few weeks, according the Federal Reserve's Beige Book, an informal scan of economic conditions in the 12 Fed Districts.
The increase was bolstered by expansions in a number of industries, including manufacturing, transportation, tourism, housing and commercial real estate markets, as well as increases in consumer spending and auto sales, said the Beige Book, which was compiled by the Federal Reserve Bank of St. Louis and released Wednesday afternoon.
Reports on banking conditions were "generally positive across the districts," the book said. "Overall loan demand increased modestly across most reporting districts. New York district bankers reported mixed but generally steady loan demand. Some bankers in the Cleveland, Chicago, and Dallas districts noted competitive pressures to reduce loan pricing. Bankers in the Philadelphia, Richmond, Cleveland, Atlanta, and Chicago districts noted a shift toward new home mortgages and away from financing (which was led, in part, by increases in interest rates)," said the report.
Credit quality reports indicated "slight to moderate improvements across the reporting districts," said the Fed. New York, Philadelphia, Kansas City and Dallas reported improvements. Credit standards remained largely unchanged, but Atlanta and Philadelphia reported increased competition to ease credit standards.
Manufacturing expanded in most districts since the last report, with increases in new orders, shipments or production. Activity in nonfinancial services was either stable or had increased in most reporting districts. Transportation also was stable or increased in most districts.
Overall consumer spending increased in most districts, with New York reporting softer retail sales in May and June. New York, Cleveland, Atlanta and St. Louis indicated sales in their districts were not meeting expectations. Weather conditions were unfavorable for retail activity in several districts.
Most districts reported increased auto sales, with strong sales in Philadelphia, Richmond, Atlanta, Chicago and San Francisco. Dallas reported slightly softer sales while the remainder of the districts indicated steady to moderate sales growth.
Tourism remained strong, but some districts--Boston, Philadelphia and Minneapolis--reported bad weather had softened tourism in their districts.
All districts reporting said that residential real estate and construction activity increased at a "moderate to strong pace," the report said.
Hiring stayed steady or rose at a measured pace in most of the districts; however, some noticed a reluctance by employers to hire permanent or full-time workers. Wage pressures were generally contained, although some districts saw "modest or moderate wage growth." Price pressures for input and final goods were stable or modest.
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WASHINGTON (7/18/13)--Housing starts and permits for future home construction in the U.S. unexpectedly dropped in June--with starts at their lowest level in 10 months, the Commerce Department said Wednesday.
The decline indicated an unsettled housing market--with rising mortgage rates potentially dampening new activity--and a significant slowdown in second-quarter U.S economic activity (The New York Times, Bloomberg.com, The Wall Street Journal and Moody's Economy.com July 17).
Starts dropped 9.9% to a seasonally adjusted annual rate of 836,000 units--the lowest level since August 2012. Economists had forecast a gain up to a 959,000-unit rate last month, according to a Reuters poll.
Also, permits to build homes decreased 7.5% in June to a 911,000-unit pace. Economists had forecast a 1.1 million-unit pace, the Times said.
Last month's decline was spearheaded by a downward slide in multifamily construction projects--which sometimes are volatile, Bloomberg said.
There will be setbacks as construction gears up, but June's slump should not be of immediate concern because the housing market will drive economic growth, Guy Lebas, chief fixed-income strategist at Janney Montgomery Scott LLP in Philadelphia, told Bloomberg.