Economy recovering modestly

WASHINGTON – Oct. 22, 2009 – The economy showed modest improvement in most districts in September, with housing and manufacturing perking up. But consumer spending and commercial real estate remained weak, the Federal Reserve said Wednesday in a mixed report.

The Fed’s “beige book,” named for the color of its cover, seems to affirm that a tepid recovery has begun but gains were “small or scattered.”

Housing was boosted by a tax credit for first-time homebuyers, though a high rate of foreclosures held down prices.

And while bank lending was still constrained, lending for entry-level buyers surged noticeably. Yet car sales slowed following the cash-for-clunkers program. Employment was mostly “weak” but there were signs of hope.

1st District: Maine, Massachusetts, New Hampshire, Rhode Island, Vermont, most of Connecticut. Economic activity was still slow but showed “some signs of improvement.” The health care industry was a bright spot, helping lift manufacturers to “modest gains” and propping up a mixed service sector. Commercial real estate was “decidedly downbeat,” with downtown Boston office rents 23 percent lower than a year ago. The specter of winter heating bills helped dampen retail spending.

2nd District: New York, northern New Jersey, Fairfield County, Conn. The region’s economy showed “scattered signs of a pickup.” Retail sales in New York City “improved considerably,” especially for one high-end department store chain. Manhattan hotel occupancy fell 30 percent from a year ago and apartment rents were down 10 percent, with landlords offering generous concessions. Activity in legal and publishing fields “virtually ground to a halt.”

3rd District: Delaware, southern New Jersey, eastern Pennsylvania. Conditions were sluggish but stable. Orders rose for industrial gear but fell for clothing and furniture, makers said. Retailers reported better-than-expected back-to-school sales, but the cash-for-clunkers frenzy siphoned September sales. Lower-priced home sales rose modestly.

4th District: Ohio, eastern Kentucky, western Pennsylvania, northern West Virginia. Despite some signs of improvement, “the recovery remains fragile.” Steelmakers reported slightly better sales. Yet banks tightened loan standards. Coal output fell, with no upturn expected in coming months, but freight transport volume ticked up.

5th District: Maryland, Virginia, North Carolina, South Carolina, southern West Virginia, District of Columbia. Manufacturers led a mixed or improving business climate with “solid increases” in shipments and even a small gain in jobs for the first time since December 2007. Revenue for phone companies was up. Mortgage lending gained steam thanks to first-time homebuyers and bargain hunters in the low end of the market. And Myrtle Beach, S.C., hotel occupancy was “much improved over last year.”

6th District: Alabama, Florida, Georgia, eastern Tennessee, southern Louisiana, southern Mississippi. Activity fell. Store traffic was disappointing, and the holiday outlook is weak. Home sales continued to rebound but at a slower pace. Although layoffs eased, firms are waiting for a surge in sales before hiring.

7th District: Iowa, northern Indiana, northern Illinois, southern Michigan, southern Wisconsin. Housing and manufacturing are reviving, but tight credit is blocking potential home buyers. Commercial rents fell, and vacancies rose. Consumers looked for bargains. Some businesses are restocking depleted inventories.

8th District: Arkansas, southern Illinois, southern Indiana, western Kentucky, northern Mississippi, eastern Missouri, western Tennessee. Business was weak. Manufacturers were shuttering plants and cutting jobs. Some cities report double-digit drops in home sales and construction permits. Heavy rains delayed the harvest.

9th district: Minnesota, Montana, North Dakota, South Dakota, upper Michigan, northern Wisconsin. Manufacturing, energy, mining and housing showed faint signs of improvement. Federal stimulus spending may have cushioned a drop in state and local infrastructure spending. The job market remained weak, but there were hopeful signs: An auto plant increased overtime, an auto supplier hired back 145 workers, and university students found more openings at a jobs fair.

10th District: Colorado, Kansas, Nebraska, Oklahoma, Wyoming, western Missouri, northern New Mexico. Economic activity grew modestly. Retail spending blipped up, helped by strong demand for cold-weather clothing and bargain goods. Jewelers struggled. Auto dealers saw sales drop off with the end of cash-for-clunkers.

11th District: Texas, northern Louisiana, southern New Mexico. The economy showed “scattered signs of improvement.’’ Technology, food, petrochemical and temporary staffing firms reported upticks. Some manufacturers cited growing demand in Asia. But airlines, energy companies and manufacturers dependent on the construction industry all shed jobs.

12th District: Alaska, Arizona, California, Hawaii, Idaho, Nevada, Oregon, Utah, Washington. Business activity rose modestly. But consumers scrimped, hunting bargains and even deferring trips to the doctor to save on co-payments and expenses that aren’t covered by insurance. Hotels in Southern California and Las Vegas reported a glut of rooms, but Hawaiian hotels saw occupancy rates rise. Computer-chip makers reported an increase in orders. Some bankers saw an increase in loan demand – but most reported that businesses don’t want to finance new projects until they’re convinced the economic recovery is for real.

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