Beige Book Report: Atlanta
June 23, 1993
Overview
According to Sixth District contacts, the Southeast economy grew at
a moderate pace through May and early June, led by gains in consumer
spending and single-family housing. Retailers reported moderate
increases in consumer spending, with particular strength noted for
auto sales. Realtors and contractors continued to see favorable
developments in most single-family housing markets, but multifamily
and commercial construction remain weak. Manufacturers reported that
factory activity generally was stable through May, with increased
production noted in consumer goods and transportation equipment.
However, manufacturing contacts also noted that expectations of
future activity have been revised downward in recent months. While
commercial loan demand has not grown much in the last month, bankers
said that consumer lending has improved in most market areas,
especially financing for new car purchases.
Consumer Spending
Retailers throughout the District reported that consumer
expenditures improved on a year-over-year basis through the end of
May, with particular strength noted during the Memorial Day holiday
weekend. Sales increases were recorded not only for apparel and home
improvement products, but also for big ticket consumer durables and
autos. Still, for the first time in several months, retailers have
begun to express some concern that current spending momentum may be
waning. Tourism and business travel remain strong, and most contacts
in the hospitality industry expect further improvement through the
summer as air passenger traffic and convention attendance continue
to outpace year-ago levels.
Manufacturing
According to District manufacturers, factory activity remained
stable through May, although reports for particular types of
manufacturing were mixed. At the same time, expectations concerning
business conditions six months from now have been revised downward.
Contacts in the textile industry noted that current demand in the
home furnishings segment of their business remained strong, while
manufacturers and other suppliers linked to automobile and light
truck production reported that recent increases in new orders have
pushed factory utilization rates to near capacity levels.
Manufacturers of construction and other industrial equipment,
however, have seen a recent decline in new orders, some of which
they attributed to uncertainties generated by the current political
debate over federal fiscal policies. Several firms reported that
these uncertainties have served to limit their hiring of new
employees, and, in general, hiring reports from manufacturers have
been more modest than in recent months.
Construction
According to realtors and contractors, single-family housing markets
continue to improve in most of the District. Home sales in May were
reported as brisk, with sales in many areas exceeding strong year-
ago levels. Improved sales were observed in all price ranges, and
new listings were said to be selling much more quickly than in the
recent past. Increased demand and tightening inventories of homes
for sale have pushed contract prices up, and contractors have now
begun to pass higher lumber prices on to new home buyers. Builders
reported that single-family residential construction is doing well,
and that the outlook through the summer remains very good. Although
multifamily construction activity remains weak, rising occupancy
levels and effective rental rates have stimulated some new apartment
development.
Commercial real estate markets also remain sluggish. Despite isolated reports of improved absorption and leasing activity, commercial realtors said that there is an abundant supply of office, retail, and industrial space for rent in most areas. Although there has been some recent increase in build-to-suit construction activity, no new speculative construction has been announced recently.
Financial Services
Bankers in the District reported that loan demand was mixed in May
and early June, with consumer lending showing some improvement while
business financing continues to be relatively flat. Consumer
lending, especially for new car purchases, picked up moderately in
May in most of the District. Residential mortgage lending also
continues at a strong pace, although the wave of refinancing has
peaked and begun to slow. Commercial loan demand has been relatively
flat, and bankers report that this has stimulated fierce competition
for new business loans.
Wages and Prices
Manufacturers reported that prices for finished products and raw
materials were basically unchanged in the last month. However,
contractors reported that after reaching a peak in March, lumber
prices have been slowly falling, while packagers reported that the
cost of paper has risen in recent weeks. There were no reports of
increasing wage pressures.