All posts by Scott Brave

Seventh District Update

by Thom Walstrum and Scott Brave

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A summary of economic conditions in the Seventh District from the latest release of the Beige Book and from other indicators of regional business activity:

Overall conditions: Growth in economic activity in the Seventh District picked up in March, and contacts generally maintained their optimistic outlook for 2014.

Consumer spending: Growth in consumer spending increased slightly in March, but remained modest. Sales of winter-related items were stronger than normal, while other sales categories, in particular light vehicles, picked up as the weather improved.

Business Spending: Growth in business spending increased to a moderate pace in March. Growth in capital spending picked up. The pace of hiring increased, and while hiring plans decreased slightly, they remained positive.

Construction and Real Estate: Growth in construction and real estate activity was modest in March. Although conditions improved, residential construction and real estate contacts reported that adverse weather continued to restrain growth. Demand for nonresidential construction grew at a moderate pace and commercial real estate activity continued to expand.

Manufacturing: Growth in manufacturing production increased from a mild to moderate pace in March, with contacts from a number of industries reporting increased activity. The auto, aerospace, and energy industries remained a source of strength. Auto and steel production recovered from the weather-related slowdown, while demand for heavy machinery remained soft.

Banking and finance: Credit conditions were again little changed on balance over the reporting period. Corporate financing costs decreased slightly, as bond spreads narrowed. Banking contacts reported moderate growth in business loan demand and modest growth in consumer loan demand.

Prices and Costs: Cost pressures were mild. While energy and transportation costs remain elevated, they were lower than during the previous reporting period. Wage pressures were slightly lower and non-wage pressures moderated.

Agriculture: The slow arrival of spring-like weather delayed fieldwork, but farmers were generally not too worried about the delay. Soybean prices rose relative to corn. The livestock sector moved further into the black, as milk, hog, and cattle prices increased.

The Midwest Economy Index (MEI) decreased to –0.03 in February from +0.32 in January, falling below zero for the first time since June 2013. Moreover, the relative MEI moved down to –0.01 in February from +0.23 in the previous month. February’s value for the relative MEI indicates that the Midwest economy was growing at a rate consistent with national economic growth.

Seventh District Update

by Thom Walstrum and Scott Brave

District%20Map.gif

A summary of economic conditions in the Seventh District from the latest release of the Beige Book and from other indicators of regional business activity:

Overall conditions: Growth in economic activity in the Seventh District slowed in January and February, as severe winter weather affected activity in a number of sectors. The modest pace of growth to start the year tempered contacts’ expectations only somewhat, as most generally maintained their optimistic outlook for 2014.

Consumer spending: Growth in consumer spending slowed to a modest pace in January and February. The poor winter weather initially benefitted some retail categories through increased sales of necessities, but eventually led to declining customer traffic and sales.

Business Spending: Growth in business spending also slowed to a modest pace in January and February. Growth in capital spending slowed somewhat, while plans for future capital expenditures edged higher. The pace of hiring slowed, as did expectations of future hiring, though expectations for the coming year remained positive.

Construction and Real Estate: Construction and real estate activity again increased modestly in January and February. While the weather affected the housing market, it continued to improve slowly, with home prices and residential rents rising modestly. Nonresidential construction grew slowly, and commercial real estate activity ticked up.

Manufacturing: Manufacturing production growth slowed to a modest pace in January and February, as unusually bad winter weather dampened demand. The auto industry remained a source of strength. Demand for steel dropped as weather interfered with transportation, and demand for heavy equipment remained soft.

Banking and finance: Credit conditions were little changed on balance over the reporting period. Equity market volatility increased and credit spreads widened some. Growth in business loan demand was slow but steady, and growth in consumer loan demand remained modest.

Prices and Costs: Cost pressures remained mild overall, though the weather pushed up prices for energy commodities. Contacts continued to report rising healthcare premiums.

Agriculture: The weather delayed shipments of agricultural products. Corn and soybean prices were up. Livestock producers’ bottom lines improved with higher prices for milk, hogs, and cattle combined with lower feed cost.

Led by improvements in the service sector and consumer spending indicators, the Midwest Economy Index (MEI) reached its highest value in December since May 2012, increasing to +0.48 from +0.33 in November. Moreover, the relative MEI increased to +0.15 in December from +0.13 in the previous month. December’s value for the relative MEI indicates that Midwest economic growth was higher than would typically be suggested by the growth rate of the national economy.

Seventh District Update

by Thom Walstrum and Scott Brave

District%20Map.gif

A summary of economic conditions in the Seventh District from the latest release of the Beige Book and from other indicators of regional business activity:

Overall conditions: The rate of growth in economic activity in the Seventh District increased in late November and December, though the overall pace continued to be moderate. Contacts were more optimistic about 2014 than they were during the previous reporting period.

Consumer spending: Growth in consumer spending picked up to a moderate pace in late November and December, with holiday sales modestly exceeding expectations. Total holiday spending was generally lower this year, though contacts indicated that improving consumer confidence and falling unemployment boosted retail activity in some areas.

Business Spending: Business spending edged up in late November and December. Growth in capital expenditures increased slightly, led by spending on structures. The pace of hiring picked up, as did expectations of future hiring.

Construction and Real Estate: Construction and real estate activity increased modestly in late November and December. Demand for residential construction continued to expand and home sales, prices, and rents all rose. Demand for nonresidential construction remained modest, but picked up some, and commercial real estate activity also improved.

Manufacturing: Manufacturing production growth was solid in late November and December. The auto and aerospace industries were again a source of strength. Low steel service center inventories continued to lift the demand for steel, and demand for heavy equipment increased slightly.

Banking and finance: Credit conditions loosened slightly over the reporting period. Equity markets continued to rise, and credit spreads moved lower. Business loan demand improved, while household loan demand was more mixed.

Prices and Costs: Cost pressures increased slightly over the reporting period, but remained mild. Wage pressures were down slightly. Non-wage costs increased, with a number of contacts reporting higher healthcare premiums.

Agriculture: Corn and soybean prices moved a bit higher, but remained well below levels a year ago. Hog prices moved lower, cattle prices were little changed, and milk prices edged up.

The Midwest Economy Index (MEI) increased to +0.27 in November from +0.23 in October, and the relative MEI increased to +0.24 in November from +0.21 in October. November’s value for the relative MEI indicates that Midwest economic growth was higher than would typically be suggested by the growth rate of the national economy.

Seventh District Economic Update

by Thom Walstrum and Scott Brave

District%20Map.gif

A summary of economic conditions in the Seventh District from the latest release of the Beige Book and from other indicators of regional business activity:

Overall conditions: The rate of growth in economic activity in the Seventh District continued to be modest, but slowed a bit in October and early November. Contacts remained hopeful for improvement in 2014, although they were slightly less optimistic than they were during the previous reporting period.

Consumer spending: Consumer spending growth remained modest in October and early November. Auto sales in the District slowed during the government shutdown, but subsequently picked up in late October and November. Non-auto retailers reported typical sales levels during the lull between the back-to-school and holiday season. They expected moderate growth in sales during the holiday season.

Business Spending: Growth in business spending flattened out in September. Growth in capital spending slowed slightly and inventories were at comfortable levels for most retailers and manufacturers. The pace of hiring edged lower and retailers indicated that seasonal hiring plans were about the same as last year.

Construction and Real Estate: Construction and real estate activity increased moderately over the reporting period. Demand for residential construction grew slightly and conditions in the residential real estate market continued to improve, but at a slower pace. Nonresidential construction grew modestly and commercial real estate activity continued to expand.

Manufacturing: Growth in manufacturing production remained moderate. The auto and aerospace industries were again a source of strength. Steel production fell slightly, as did demand for specialty metals. Demand was up for construction materials and heavy- and medium- duty trucks; demand for heavy equipment remained soft.

Banking and finance: Credit conditions changed little on balance over the reporting period. Volatility decreased significantly across several asset classes and equity markets saw significant improvements. Demand for commercial and industrial loans remained relatively unchanged. Contacts noted increased consumer borrowing, but saw declining residential mortgage activity as the increase in borrowing rates discouraged refinancing.

Prices and Costs: Cost pressures changed little since the last report. Overall, commodity prices were up slightly. Retailers noted that heavy promotional activity is planned for the holiday season. Wage pressures were up slightly and non-wage labor costs were steady.

Agriculture: Harvesting took longer this fall because of delays from precipitation and a larger crop. Pastures and winter wheat fields were in better shape than they were last year. Crop and hog prices fell; milk and cattle prices were a bit higher.

The Midwest Economy Index (MEI) decreased to +0.22 in October from +0.34 in September, and the relative MEI fell to +0.19 in October from +0.62 in September. October’s value for the relative MEI indicates that Midwest economic growth was higher than would typically be suggested by the growth rate of the national economy.

The Chicago Fed Midwest Manufacturing Index (CFMMI) increased 0.4% in October, to a seasonally adjusted level of 97.4 (2007 = 100). Revised data show the index was up 0.3% in September. The Federal Reserve Board’s industrial production index for manufacturing (IPMFG) moved up 0.3% in October. Regional output rose 5.7% in October from a year earlier, and national output increased 3.6%.

Seventh District Update

by Thom Walstrum and Scott Brave

District%20Map.gif

A summary of economic conditions in the Seventh District from the latest release of the Beige Book and from other indicators of regional business activity:

Overall conditions: The rate of growth in economic activity in the Seventh District slowed a bit in September. Contacts remained generally optimistic, although several expressed concern about the potential impact of the federal government shutdown.

Consumer spending: Consumer spending grew modestly in September, falling short of retailers’ expectations. Auto sales increased at a slower pace and back-to-school spending was less than last year. Retailers expected holiday season spending to be similar to last year.

Business Spending: Growth in business spending flattened out in September. Growth in capital spending slowed slightly and inventories were at comfortable levels for most retailers and manufacturers. The pace of hiring edged lower and retailers indicated that seasonal hiring plans were about the same as last year.

Construction and Real Estate: Construction and real estate activity continued to increase in September. Demand for residential construction grew moderately, as did activity in the residential real estate market. Nonresidential construction grew modestly and commercial real estate activity continued to expand.

Manufacturing: Growth in manufacturing production decreased slightly in September. The auto and aerospace industries were again a source of strength. Steel production was steady, demand for specialty metals, construction materials, and household appliances declinedslightly, and demand for heavy equipment remained soft.

Banking and finance: Credit conditions changed little on balance over the reporting period. Banking contacts noted competitive pressures for commercial and industrial loans, with narrowing spreads and easing standards. Consumer loan demand was steady, with a decrease in mortgage lending and an increase in auto lending.

Prices and Costs: Cost pressures changed little in September. Overall, commodity prices were down slightly. Retailers again noted a slight increase in wholesale prices. Wage pressures remained mild and non-wage labor costs increased.

Agriculture: Although the year’s drought affected the harvest, corn and soybean yields in parts of the District were higher than expected in September though rains slowed harvesting. Corn, soybean, hog, and fruit prices decreased, while milk and cattle prices increased.

The Midwest Economy Index (MEI) increased to +0.41 in August from +0.22 in July, and the relative MEI rose to +0.73 in August from +0.45 in July. August’s value for the relative MEI indicates that Midwest economic growth was higher than would typically be suggested by the growth rate of the national economy.

The Chicago Fed Midwest Manufacturing Index (CFMMI) increased 1.5% in August, to a seasonally adjusted level of 96.7 (2007 = 100). Revised data show the index was down 0.7% in July. The Federal Reserve Board’s industrial production index for manufacturing (IPMFG) moved up 0.7% in August. Regional output rose 4.0% in August from a year earlier, and national output increased 2.8%.

Seventh District Update, September 2013

by Thom Walstrum and Scott Brave

District%20Map.gif

A summary of economic conditions in the Seventh District from the latest release of the Beige Book and from other indicators of regional business activity:

Overall conditions: The pace of economic activity in the Seventh District improved in July and August, and contacts generally expected growth to remain moderate for the rest of the year.

Consumer spending: Growth in consumer spending picked up a bit in July and August. Auto sales rose, continuing to outpace growth in non-auto retail sales. Non-auto retail sales increased modestly, with sales of luxury and housing-related items improving.

Business Spending: Growth in business spending also picked up some in July and August. Contacts reported making moderate investments in equipment and software and structures, but inventory investment decreased. Labor market conditions also softened a bit.

Construction and Real Estate: Construction and real estate activity increased further in July and August. Demand for residential construction grew steadily, as did activity in the residential real estate market. Nonresidential construction grew at a more modest pace and commercial real estate conditions continued to improve.

Manufacturing: Growth in manufacturing production increased in July and August. The auto industry continued to be a source of strength and steel production again grew at a moderate pace. Demand for heavy equipment remained soft, although demand for construction equipment continued to strengthen.

Banking and finance: Credit conditions tightened some over the reporting period. Banking contacts cited a modest reduction in overall business loan demand, but noted continued steady growth for commercial and industrial loans in the middle market. Consumer loan demand continued to increase, particularly for auto lending, and mortgage lending rose.

Prices and Costs: Cost pressures were moderate in July and August. Contacts noted an increase in some commodity prices. Retailers again reported mostly modest increases in wholesale prices and wage pressures were mild.

Agriculture: Abnormal dryness affected much of the District during the reporting period, lowering expectations for crop yields. However, conditions remain much better than a year ago. Corn, soybean, wheat, hay, milk, hog, and cattle prices all decreased.

The Midwest Economy Index (MEI) increased to +0.25 in July from –0.11 in June, and the relative MEI rose to +0.45 in July from –0.16 in June. July’s value for the relative MEI indicates that Midwest economic growth was somewhat higher than would typically be suggested by the growth rate of the national economy.

The Chicago Fed Midwest Manufacturing Index (CFMMI) decreased 0.1% in July, to a seasonally adjusted level of 95.8 (2007 = 100). Revised data show the index was up 0.4% in June. The Federal Reserve Board’s industrial production index for manufacturing (IPMFG) moved down 0.1% in July. Regional output rose 1.6% in July from a year earlier, and national output increased 1.5%.