Beige Book, McGraw-Hill report fall in construction; PPI slips but some materials jump

“Reports from the 12 Federal Reserve Districts indicated either stabilization or modest improvements in many sectors since the last report, albeit often from depressed levels,” the Fed reported on Wednesday [Oct. 21] in the Beige Book (so named for the color of its cover), a summary of informal soundings of business conditions conducted in each district fromlate August to Oct. 12. “Leading the more positive sector reports among districts were residential real estate and manufacturing, both of which continued a pattern of improvement that emerged over the summer. ... Districts generally reported little or no increase to either price or wage pressures, but references to downward pressures were occasionally noted. While upward price pressures were generally subdued in most districts, materials prices increased in Cleveland (mainly for steel) and Kansas City. [Districts are named for their headquarters cities.] Residential construction activity remained weak in most districts. ... Commercial real estate continued to weaken across the 12 districts, although even this sector had scattered bright spots. Each district indicated that demand for private commercial real estate was weak, with New York, Philadelphia, Cleveland, Atlanta, Chicago, St. Louis, Kansas City, and San Francisco all characterizing activity as declining further since the last report. An inability to obtain credit was often cited as a problem for businesses thatwanted to purchase or build space. High vacancy rates were noted as a key concern especially for landlords who were not offering concessions. And, while industrial real estate in the Richmond District was generally weak, renewed interest by retailers to revisit postponed expansion plans was also noted. Finally, public nonresidential construction activity funded by federal stimulus projects was a source of strength in the Cleveland, Chicago, Minneapolis, and Dallas districts, but gains were often offset by state and local government cutbacks,” according to an Oct. 26 Data DIGest report.

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