Review of the most recent economic growth conditions in the 12 Federal Reserve districts and the outlooks for them appear to continue to grow, slowly, but not without some significant shades of gray.

The Fed's latest Beige Book regional conditions roundup found only moderate improvement to the economy; but it was an improvement characterized as "widespread across sectors." Perhaps the most enthused about overall recent growth and near-term prospects were contacts in the Kansas City district.

The Beige Book noted that manufacturing continued to lead the way for the rest of the economy with the most steady improvement and, long-absent evidence of increased hiring. Ten of the 12 districts (excluding mixed results in Boston and Richmond) demonstrated "robust" manufacturing sector activity, with New York performing exceptionally well. There was even talk of improvements in the long-battered commercial real estate sector, with more than half of the districts noting reasons for an optimistic view.

Granted, there were plenty of worrisome signs in the latest Beige Book roundup, which tracked a period from mid-to-late February through early April. Chief concerns among Fed contacts were the possibility of significant sales and production disruptions stemming from the Japan disasters, elevated commodity prices and the impact of a still dragging resident real estate sector on household wealth/consumer confidence.

First District - Boston
Manufacturing contacts noted business was good overall with particularly strong returns for the chemical business and great expectations for the first-quarter on the part of technology-related producers. However, totals did not surge at the level of other districts. Still, reports from Fed contacts estimate employment gains for most business services to range from 3% to 12% this year. Commercial real estate was essentially flat during the last six or so weeks. There were signs of higher office rents in the key Boston market.

Second District - New York
Strong consumer spending has helped optimism in the district. Newfound stability is the name of the game in the multifamily/mixed-use real estate game. Office markets are mixed with a scaling back of concessions from property owners in New Jersey, but there was a surge to a multi-year high in vacancies in Long Island, NY. No change has been reported in credit standards or demand for loans on the part of commercial and industrial firms.

Third District - Philadelphia
Manufacturing rebounded in March with more than half of the district's manufacturers noting increases in shipments and new orders. Fabricated metals and industrial machinery producers led the charge, said the Fed. Within commercial real estate, rents appear to have "bottomed out" and are beginning a slow build. Demand for loans from that sector and most small businesses in general seems to have picked up in March.

Fourth District - Cleveland
New orders and production were steady despite some fears of seasonal declines noted in the last Beige Book. Still, production was generally higher in the district at this point last year than at present. Manufacturers are, however, maintaining predictions of moderate growth throughout 2011. Those in the construction sector have reported rising prices in building materials of late, especially steel and all petroleum-based components. Demand for business loans great at a modest pace, and came from a widespread swath of sectors.

Fifth District - Richmond
Manufacturing demonstrated more expansion in March, though not as robust as other districts, the Fed said of District 5. In fact, one auto-parts supplier noted demand has exceeded available capacity. However, those in that industry as well as others relying on raw materials have noticed delays and fretted they could worsen and slow production considerably. Small businesses have been borrowing more from banks of late, largely for equipment upgrades and plant expansion projects.

Sixth District - Atlanta
Demand for credit in the region has not rebounded like some other regions, especially those to the north. There were, however, some gradual labor market recoveries of note. Manufacturing, naturally, had even better news with more strong growth in new orders and production levels. Rainfall totals have helped agricultural producers, but there are lingering levels of drought in much of the region.

Seventh District - Chicago
Like in February, business spending showed an uptick in March. Capital expenditures are occurring as planned, with several major manufacturers purchasing key equipment. Small improvements were noted in vacancy rates, though not commercial real estate rent prices. More expansion was found in manufacturing, led by the steel, automotive and heavy equipment sub-sectors. Credit conditions also showed improvement in late February and March. Agricultural contacts noted volatility in commodity prices, but that soil was generally in good shape to begin planting season.

Eighth District - St. Louis
After being the only district to show a decrease in manufacturing activity during the last Beige Book period, some growth was noted in the sector throughout March. But it's a tale of two groupings with firms in silicone products, rubber products and military vehicle manufacturing, among others, planning for expansion amid good returns; but firms in surgical equipment, packaging and weapons manufacturing saw seeing layoffs and decreases in operations. Commercial borrowing decreased by nearly 9% through late March/early April. Agricultural sector contacts noted minute gains.

Ninth District - Minneapolis
Manufacturing output again surged, and more than half the companies polled expected better sales in 2011 than in 2010. Commercial construction activity increased, with office permits seeing an uptick in markets such as Sioux Falls, SD. Office and industrial vacancy rates were also down in areas including Minneapolis/St. Paul and Fargo, ND. Agricultural producers in the district enjoyed strong conditions considering the flooding they had to contend with. Prices for commodities increased in recent weeks, as well.

Tenth District - Kansas City
Manufacturing showed rapid expansion, led by high-tech service and transportation firms as well as factories. New orders surged and expectations for coming orders remained strong. Demand from business for credit has increased, though credit standards have remained largely unchanged for the fifth consecutive six-week tracking period. Ag growing conditions were tested mightily, with much of the winter wheat crop threatened by intensifying drought issues.

Eleventh District - Dallas
High-tech manufacturing, which had enjoyed good conditions earlier this year, and the previously struggling construction product business changed shoes for a period. High-tech firms are feeling the impact of Japanese factory shutdowns, while those in construction enjoyed a surge as pent-up demand following poor weather conditions brought people back to the market in droves. Office and industrial leasing enjoyed a small uptick. Ag contacts noted drought conditions affected upwards of 90% of the district though demand for their products stayed strong.

Twelfth District - San Francisco
Manufacturing showed strong gains, again with commercial aircraft/parts and semiconductor producers doing well. Ag product activity was "robust," and contacts noted rising prices. Commercial real estate remained at very low levels. Businesses in several sectors have been showing more interest in garnering credit, mostly for capital spending projects, Fed contacts said.

Brian Shappell, NACM staff writer, can be reached at


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