Economic activity in the Southeast grew modestly over the past few weeks, and the outlook among Atlanta Fed business contacts remains generally positive, according to the Federal Reserve’s new Beige Book
Reports from business contacts across economic sectors were largely upbeat. For example, retailers reported steady sales since the last report in September and said they expect a healthy holiday sales season. Residential real estate markets showed signs of improvement, commercial real estate activity was steady, and manufacturing activity picked up.
At the same time, the report revealed concerns. Among manufacturing contacts, optimism dimmed, as one-fifth of those surveyed expect higher production during the next six months, down from a third in the previous Beige Book reporting period. That reading appears to be in line with other reports describing a slowdown in manufacturing activity nationally. Difficulty finding and keeping quality workers continued to constrain business growth across sectors, according to the Atlanta Fed’s contacts. Meanwhile, chemical and petrochemical companies said production was softening because of slowing global economic growth.
Other notable items in the Beige Book include:
- Some firms continued to pursue automation to offset labor shortages.
- Overall, firms continued to note increasing nonlabor costs. Firms most affected by tariffs indicated they were more likely than other firms to pass higher costs along to customers.
- Even though tourism and hospitality industry contacts indicated more uncertainty compared to a year ago, they said they are generally upbeat about the rest of 2019 and next year.
- Declining mortgage rates fueled greater demand for housing as sales improved and prices rose. However, demand continues to exceed the supply of homes for sale in many markets across the Atlanta Fed’s district, which encompasses Alabama, Florida, Georgia, and parts of Louisiana, Mississippi, and Tennessee.
- Most contacts in the transportation industry expect activity over the next year to be flat to slightly up.
- Bankers reported that the volume of consumer and commercial real estate loans continued to rise, but the pace of growth slowed.
- Renewable energy sales and production remained strong, especially for wind and solar power.
- Farming conditions were mixed, as several parts of the Sixth District suffered from droughts.
The Fed issues the Beige Book before each of the eight scheduled meetings
Charles Davidson
Staff writer for Economy Matters