Beige Book-Philadelphia: Business Activity Improved Overall -1 ...

WASHINGTON (MNI) ? The following is the first part of the text of
the Philadelphia section of the Federal Reserve?s Beige Book report on
current financial conditions released Wednesday:

Business activity in the Third District has improved overall since
the last Beige Book. Manufacturers reported increases in shipments and
new orders in March. Retailers achieved slight year-over-year increases
in sales in March. Motor vehicle dealers also reported year-over-year
sales increases in March. Third District banks reported little overall
change in loan volume outstanding since the last Beige Book, although a
few reported increased lending on home equity credit lines and growth in
small business lending. Residential real estate agents reported some
increase in activity since the last Beige Book as measured by inquiries,
showings, and traffic, but little pickup in sales or construction.
Contacts in the commercial real estate sector said that leasing and
construction activity have remained slow since the last Beige Book.
Service-sector firms reported some increases in activity. Business
contacts reported further price increases for inputs as they did in the
previous Beige Book. Output price increases have also been reported in
several sectors, but by fewer contacts than for factor prices.

The outlook among Third District business contacts is positive and
has strengthened slightly. Manufacturers forecast a broad rise in
shipments and orders during the next six months. Retailers expect sales
to increase modestly on a year-over-year basis. Bankers expect only
slight growth in lending over the next two quarters. Contacts in
residential real estate have mixed views, although some expect a pickup
in sales of existing homes. Contacts in commercial real estate expect
market conditions to improve slowly during the year. Service-sector
companies expect continued slow growth through the first half of 2011.

Manufacturing

More than half of Third District manufacturers reported increases
in shipments and new orders in March a stronger response than in
February. Producers across a broad spectrum of 13 manufacturing sectors
reported increased demand. The strongest reports came out of the
fabricated metal products and industrial machinery and equipment
sectors. Declines in orders were predominant only among producers of
apparel and rubber products. While several manufacturers cited existing
customers as the source of increased orders, other sources included new
product offerings and expanding international opportunities.

Over two-thirds of Third District manufacturers expect business
conditions to improve during the next six months. Among the firms
surveyed in March, over 60 percent expect increases in new orders and
shipments, and less than 5 percent expect decreases. One supplier of
construction industry materials reported receiving contracts extending
further out into the fourth quarter. Plans to increase capital spending
became more widespread with over one-third of area manufacturers
projecting an increase over the next six months.

Retail

Third District retailers generally reported slight year-over-year
increases in sales in March. One merchant said, \Things are getting a
little better, but there is no move to stronger growth.. Retailers
indicated that sales of furniture and home goods have risen recently,
but sales of spring apparel have been slow to pick up, which retailers
attributed to unseasonably cold weather and the late Easter date this
year. Some retailers said they have experienced shortages of a few goods
produced by Japanese companies, mainly electronic products, but as of
late March there did not appear to be a widespread interruption of
imports of consumer goods from the Far East. Store executives surveyed
for this report expect the current modest rate of sales growth to
continue through the spring.

Third District auto dealers generally reported that sales were
above the year-ago level in March and were continuing to move up. Some
dealers of various brands noted the beginning of supply interruptions
due to halts of vehicle and parts production in Japan resulting from the
earthquake and subsequent problems there. These dealers said the supply
problem had not yet become serious, but they did not know how extensive
it might become or how long it might last. Dealers reported that demand
for large vehicles has not declined yet despite the recent increase in
the price of gasoline. Dealers said they see evidence of \pent-up
demand. and they expect sales to remain strong as long as economic
conditions are improving and the price of gasoline does not rise much
higher.

Finance

Total outstanding loan volume at most of the Third District banks
contacted for this report has shown little change in recent weeks. Some
banks in the region reported recent increases in lending extended on
home equity credit lines, but other forms of consumer credit have been
level or moved down. Some banks reported increases in commercial and
industrial loans and some types of commercial real estate loans. One
banker said, ?We?re making more small business loans, and commercial
real estate lending is picking up except for retail properties.? The
outlook among Third District bankers interviewed for this report is that
total oan volume will expand slowly this year, as overall economic
activity advances, with gains mostly in commercial and industrial and
consumer lending, but lending for residential or commercial construction
is not expected to increase.

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** Market News International Washington Bureau: 202-371-2121 **

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Source: http://www.forexlive.com/180419/all/beige-book-philadelphia-business-activity-improved-overall-1

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