Beige Book Report: Atlanta
March 10, 1993
Overview
According to Sixth District contacts, the pace of the region's
economic expansion eased modestly in February from late 1992.
Retailers reported that sales remain above year-ago levels but by
smaller margins than in December. Factories continued to edge
production higher with negligible work force expansion. Realtors and
home builders expressed confidence in the housing market, although
sales and building intentions have been frustrated by unfavorable
weather throughout most of the District. Aside from a new wave of
mortgage refinancing, bankers generally reported that consumer and
commercial loan demand is slowly improving. Except for some
construction products, particularly lumber, prices have remained
relatively stable and no significant wage pressures are reported.
Consumer Spending
Most retailers reported year-over-year increases in sales through
mid-February and were generally upbeat about prospects through mid-
1993. However, year-over-year sales gains did not match the vigorous
pace of year-end 1992. Spending growth at smaller establishments
reportedly slowed more than at department stores. Retailers remained
content to carry lean inventories, so price discounting was less
widespread during February than in recent years. Strength in auto
sales varied, although most dealers reported slight year-over-year
increases in February. Tourism remains a bright spot in the regional
economy. Air passenger traffic and convention attendance continue to
out-pace year-ago levels, and further gains are expected at least
through mid-1993.
Manufacturing
Overall factory activity continued to expand early in 1993. Although
most contacts reported increases in new orders and production, few
indicated expanding employment rolls. Appliance, furniture, carpet,
and building materials producers are benefiting from increases in
home building and renovations nationally. In addition, auto industry
suppliers have increased production in response to growing new
orders. Some textile contacts report new intentions to invest in
productivity-enhancing equipment. However, the region's
aerospace/defense industry announced layoffs, and suppliers of
commercial construction materials have yet to see an upturn in
business activity.
Construction
Realtors report that generally favorable housing market conditions
are being sustained by falling mortgage rates and improved buyer
confidence. They remain optimistic about sales of single-family
homes and construction for the rest of the year. While most contacts
saw better home sales in early February, several did note that
inclement weather slowed their January business. Sales currently are
running at or below strong year-ago levels. Most of the activity
remains in the low- to mid-price ranges, while sales of luxury homes
remain weak. Contacts are now reporting some inventory tightening.
According to home builders, single-family construction continues to
improve, but sharply higher lumber prices are reportedly pushing up
new home prices.
Most office construction has been limited to build-to-suit contracts and there is very little speculative activity, despite scattered reports of declining vacancy rates. Financing for speculative projects remains hard to obtain.
Financial Services
Most bankers around the region reported modest gains in loan demand
in January and February, but some commercial lenders expressed
disappointment in the pace of improvement. For consumers, credit
card receivables are running moderately ahead of last year. Mortgage
lending is again on the upswing in response to falling rates, with
refinancing generally comprising a majority of total mortgage
originations.
Wages and Prices
Although a few factory contacts reported increases in materials
prices, finished goods prices remain relatively steady. Some
manufacturers are attempting to post price increases, but are unsure
whether they will stick in a very competitive environment. There are
no indications of wage pressures.