Beige Book: Economy Continues to Expand As Demand for Credit Varies



According to the most recent Beige Book from the Federal Reserve, the economy continued to expand across most reporting regions from early October through mid-November. Additionally, outlooks were mainly positive, with six districts expecting moderate growth.

Demand for manufactured products was mixed during the current reporting period, with the strong dollar being cited as a headwind to more robust demand in a few districts. Modest to moderate increases in capital investment are expected in several other districts. Business service firms saw rising activity, especially for high-tech and information technology services. Reports from ground freight carriers were mixed, while port cargo increased.

A majority of districts reported higher retail sales, especially for apparel and furniture. New motor vehicle sales declined in most districts, with a few districts noting a shift in demand toward used vehicles. Tourism was mostly positive relative to year-ago levels.

Residential real estate activity improved across most districts. Single-family construction starts were higher in a majority of districts, while multifamily construction reports were mixed. Activity in nonresidential real estate expanded in many districts as well.

Banking conditions were largely stable, with some improvement seen in loan demand. Farmers across reporting districts were generally satisfied with this year’s harvests. However, low commodity prices continue to weigh on farm income. Investment in oil and gas drilling increased slightly, while reports on coal production were mixed. A tightening in labor market conditions was reported by seven districts, with modest employment growth on balance. districts noted slight upward pressure on overall prices.

District reports indicated that the demand for credit varied widely during the reporting period. On the commercial side, New York, Philadelphia and St. Louis experienced strong demand for commercial and industrial loans, while C&I lending was slower in Dallas. In Atlanta, some small businesses had trouble obtaining credit, and St. Louis reported slightly lower credit worthiness for agricultural customers only. Credit quality was unchanged across most districts, though improvements were seen in New York, Philadelphia and Chicago. Credit standards tightened in select loan categories in the Boston, New York and Philadelphia districts, but they loosened slightly in Richmond, where contacts reported facing competition that used more aggressive loan structures.


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Terry Mulreany
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