WASHINGTON (MNI) – The following is the third and final part of the
text of the summary of the Federal Reserve’s Beige Book report on
current financial conditions released Wednesday:
Banking and Financial Services
Loan demand varied across District and loan category. Richmond,
Dallas, and San Francisco noted improvements in overall loan demand,
while Kansas City observed a decrease. Demand for residential real
estate loans increased in Philadelphia, Atlanta, and Dallas but was
weaker in New York, Cleveland, St. Louis, and Kansas City. The New York,
Philadelphia, Richmond, Chicago, and San Francisco Districts reported
improvements in commercial loan applications. The Dallas District
experienced mixed commercial loan demand, while St. Louis noted that
demand was unchanged to weaker. Cleveland reported business loan
applications were beginning to pickup but demand for consumer loans
remained soft. The Philadelphia District expected little change in loan
volume as consumers remained reluctant to borrow.
Most Districts reported that credit standards were unchanged to
tighter. Kansas City reported standards were unchanged for all types of
loans. New York noted some tightening of commercial loan standards but
little change in the standards for residential mortgages or consumer
loans. The Atlanta District reported increased standards for residential
mortgage loans. St. Louis indicated standards had tightened somewhat for
commercial mortgages, but were unchanged for C&I loans, and were
unchanged to somewhat tighter for residential mortgages. San Francisco
noted relatively restrictive standards for both consumer and commercial
loans.
Community bankers in the Chicago and Dallas Districts cited
increased competition for C&I lending from large banks. Atlanta noted
improvements in credit conditions for all loan segments except those
related to residential construction and real estate. Cleveland,
Richmond, Chicago, Kansas City, and vii
Dallas indicated steady to improving credit quality, and New York
reported steady to lower delinquency rates. San Francisco reported that
venture capital financing was improving with increased investor interest
and IPO activity.
Agriculture and Natural Resources
Adverse weather conditions continued to hamper agricultural
production in many areas. Extremely cold and/or dry conditions
negatively affected crops or livestock in the Richmond, Atlanta, and
Dallas Districts. Kansas City also reported poor growing conditions. St.
Louis described mixed results for production in many crops, but large
increases in rice and cotton production were noted. Most reporting
Districts noted continued strong commodity prices were benefitting
producers of cotton, corn, soybeans, wheat, poultry, hogs and cattle
while there are also some reports of rising input prices, particularly
in fertilizer and feed prices. San Francisco observed some boost in
export sales for timber companies.
Energy activity expanded or remained stable since the last report.
Kansas City and Dallas noted strong drilling activity, while Cleveland
and Atlanta reported a decline in permit issuance. In the Atlanta
District, drilling activity remained below pre-Gulf of Mexico oil spill
levels, although up slightly since October 2010. Coal production
remained above year-ago levels in the St. Louis and Kansas City
Districts and held steady according to Cleveland. Kansas City reported
that oil and gas production increased, while Cleveland noted that
production held steady. San Francisco reported that global demand
supported oil extraction, while Minneapolis experienced stable oil
exploration.
Prices and Labor Markets
Manufacturing and retail contacts across Districts reported rising
input costs. Manufacturers in many Districts conveyed that they were
passing through higher input costs to customers or planned to do so in
the near future. Homebuilders in the Cleveland and Atlanta Districts
noted rising material costs, but viii
acknowledged little ability to pass through the costs to buyers.
Retailers in some Districts mentioned they had implemented price
increases or were anticipating such action in the next few months. There
is little evidence of wage pressures across Districts. Wages remained
steady in the Boston, Philadelphia, Cleveland, Kansas City, and Dallas
Districts, while moderate wage pressures were reported in the Chicago,
Minneapolis and San Francisco Districts. Philadelphia, Dallas, and San
Francisco noted that most wage increases were for workers with
specialized skills.
Labor market conditions continued to strengthen modestly, with all
Districts reporting some degree of improvement. The Boston, Cleveland,
Minneapolis, and Dallas Districts cited noticeable improvements in the
manufacturing sector, and the Boston and Cleveland Districts also
observed increased labor demand in the healthcare and medical sectors.
New York reported little or no hiring in the manufacturing sector,
although their factory contacts planned on increasing hiring in the
coming months. The Boston, Philadelphia, Cleveland, Richmond, Atlanta,
Chicago, and Dallas Districts received optimistic reports from staffing
agencies. Dallas said that staffing firms experienced continued strong
demand, particularly for high-skilled IT positions. The Cleveland
District staffing contacts noted some growth in the number of new job
openings, with vacancies concentrated in healthcare, manufacturing, and
professional business services. Chicago reported that a large staffing
firm reported solid growth in billable hours for both industrial and for
office and clerical positions, as well as increases in both
temporary-to-permanent job transitions and direct hiring of permanent
employees. Boston, Richmond, and Chicago noted increases in the
conversion of temporary to permanent hires and permanent job placements,
while contacts in the Atlanta District reported a preference for hiring
temporary staff. Employers in the Boston District reported difficulty in
finding qualified candidates for high-skilled jobs. Despite the
improvement in most labor markets, some Districts such as New York, St.
Louis, Minneapolis and Dallas also noted layoffs in the region.
– end – 3 of 3 –
** Market News International Washington Bureau: 202-371-2121 **
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