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New home sales, spending are flat
Published on Thursday, Jun 12, 2008
Beacon Journal staff report
Economic activity since early April has been stable in Ohio and parts of Kentucky, West Virginia and Pennsylvania that make up the Federal Reserve Bank of Cleveland's district, according to the latest Beige Book survey released Wednesday.
On balance, employment was largely unchanged across the district. Contacts reported modest wage pressure. Staffing firms saw little net change in the number of job openings, while the number of job seekers increased. Job vacancies were greatest in medical-related fields.
Other data from the Cleveland Fed's district over the last six weeks show:
MANUFACTURING
Output was stable to increasing.
Increased production was attributed primarily to seasonal adjustments or rising demand by customers in energy-related industries. Manufacturers' outlook is best described as guarded. Steel shipments were stable to increasing.
Auto production showed a slight uptick in April. Compared to a year ago, auto production was down appreciably.
Access to credit is not an issue for manufacturers. All contacts reported substantial price increases for raw materials; two-thirds of contacts either raised product prices or increased surcharges and most are considering additional price increases. A third of respondents said they had recently hired a small number of workers, some on a temporary basis.
REAL ESTATE
New home sales were flat to declining and inventory levels remain high. Almost all home builders expect no improvement for the remainder of the year.
New home prices have been relatively stable since six weeks ago, though discounting
has increased. Several general contractors reported reductions in staff.
Commercial contractors said business has been steady. Owners and developers are finding it more difficult to obtain funding because of stricter credit standards. Work force levels remain largely unchanged.
CONSUMER SPENDING
Retailers reported flat to improving sales since the last Fed report. Contacts are cautious in their outlook for the third quarter, with the majority expecting sales to be relatively flat. Auto dealers reported new and used car sales were mixed, while purchases of SUVs and trucks declined. Most retailers have passed cost increases through to their customers. Employment growth is limited to staffing new stores.
BANKING
Demand for commercial and industrial lending was mixed.
Segments showing strength include commercial real estate and small business loans. Consumer loan demand weakened, especially for autos. A few contacts noted a pickup in home equity lines of credit. Most respondents experienced a slight increase in delinquencies. An uptick in home mortgage originations is not seen as the beginning of a trend.
Bankers said credit is available, though lending standards continue to tighten. Employment levels showed a small net decline.
ENERGY
There was little change in oil, gas and coal production. Energy producers reported a pickup in oil and gas drilling. Contacts expect to see a rise in production activity.
Employment levels increased slightly, and producers are looking to expand payrolls but many said it is difficult to attract qualified workers.
TRANSPORTATION
Freight shipments have been flat since the last report, with volumes running below available capacity.
Most carriers expect current market conditions to continue into the second half of 2008, with some modest improvement toward the end of the year. All contacts noted a significant jump in fuel prices, which they were largely able to pass through via a surcharge.
Beacon Journal staff report
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