www.CUNA.org/newsnow (4/14/11) Economic activity in the U.S. generally improved across all 12 Federal Reserve Home Loan Bank districts. However, the consequences of Japan's earthquake and nuclear crisis, and the unrest in North Africa and the Middle East, are causing high uncertainty in parts of the country, according to the Federal Reserve's Beige Book, an survey of the Fed's 12 districts.
"Reports focusing on the near-term outlook were most often upbeat," said the Fed's report.
"Some districts, however, also noted uncertainties remained high. Boston, Philadelphia, Richmond, Atlanta, Chicago, Minneapolis and Dallas all noted actual or expected disruptions to sales and production as a result of the tragedy in Japan."
Manufacturing led in the gains, and comments on manufacturing's outlook were generally positive.
Boston noted that manufacturers "generally remained cautiously optimistic but voiced greater uncertainty about the outlook for the rest of the year, based on the disruption at Japanese facilities, the geopolitical climate worldwide, and ambiguity about U.S. government spending plans," said the Beige Book. Chicago cited contacts' optimism was tempered by "elevated uncertainties surrounding recent global events."
Wage pressures were described as weak or subdued by most Districts.
However, "higher commodity costs were widely reported to be putting increasing pressures on prices. Energy prices were cited most often, but raw materials in general were an increasing concern of business. The ability to pass through cost increases varied across districts, with manufacturers generally finding less resistance to price increases than either retail or construction (where weak demand was a limited factor)," the Fed said.
Consumer spending picked up modestly, with auto sales increasing in most districts. Tourism gained strength in six districts, although Japanese tourism in Hawaii dropped.
Non-financial service firms reported expansion, with Minneapolis and Atlanta receiving mixed reports from businesses there. Transportation service firms' reports were mostly positive.
Real estate sales for single family homes were largely unchanged from low levels or continued to weaken, and commercial real estate activity remained weak through all districts.
Most districts said loan demand was unchanged or slightly improved since the last report. However, many reporting improvements also said demand was weak in some market segments. Credit standards were unchanged or slightly tighter, and competition for quality loans was intense, reported several districts.
Labor market conditions were generally stronger than in the previous report for most districts. Some noted increased hiring while others reported difficulty in recruiting highly specialized workers. St. Louis and Minneapolis districts reported layoffs in the manufacturing sector.
Assessments of agricultural activity were mixed, with some areas experiencing droughts and others reporting wet weather and spring flooding. Activity in the energy industry generally strengthened since the last report.
The summary was prepared by the Federal Reserve Bank of Richmond and based on information collected before April 4. It summarized comments received from businesses and other contacts outside the Federal Reserve. The book is not a commentary on the views of Fed officials. For more detail from each district, view the report online.