The Tenth District economy improved slightly in late August and September. Retailers and auto dealers reported stronger sales and anticipated further gains in the months ahead. Sales were weaker at restaurants and hotels, leading to pessimism in these industries as the holiday season approaches. Manufacturing activity rose at durable goods factories, and the high-tech services industry experienced strong growth, while transportation activity was flat. Residential and commercial real estate and construction contacts continued to report weak conditions. Bank deposits continued to increase, while loan demand and loan quality deteriorated slightly. Crop conditions varied across the District, but farm income expectations remained strong. The energy sector expanded further with production increasing for oil, natural gas and coal. As input prices continued to increase, more contacts expected to raise prices in the coming months. But wage pressures eased from already low levels.
On real estate:
Residential and commercial real estate activity remained weak during late August and September. Residential sales were flat during the survey period, and home prices were down. Real estate contacts expected sales to be much slower in the coming months, but many attributed this to the seasonal slowdown. Residential mortgage lenders continued to report an increase in refinancing activity due to low mortgage rates, but very little new loan activity. Construction supply firms saw sales fall during the survey period, and they expected upcoming sales to be weak due to the seasonal slowdown of the construction industry. Housing starts were flat, and builders did not foresee activity increasing in the next three months. Multi-family building projects were the only area of reported growth by commercial construction contacts. Commercial real estate sales and prices continued to decline, and vacancy rates were flat. District contacts expected commercial prices and rents to decline further in the coming months. Developers reported no change in their access to credit.