Beige Book Report: Atlanta
September 13, 1995
Overview
The Southeast economy continued to grow at a moderate pace in late
summer, according to contacts in the District. Merchants saw strong
back-to-school sales increases and anticipate modest year-over-year
growth in the remainder of the year. Similarly, manufacturers in a
number of industries say that prospects remain bright. Tourism and
business travel are surpassing last year's levels. Residential and
commercial construction continue to expand in most of the region.
Bankers report weak consumer loan demand but moderate to strong
commercial loan demand. Most contacts report little change in wage
and price pressures from the last Beige Book period.
Consumer Spending
Most retailers in the District reported that back-to-school sales
have been excellent; however, a few said that sales were below their
expectations. Some merchants also said that inventories are a little
heavy but are not a great concern at this point. Both men's and
women's apparel sales were disappointing and failed to move above
last year's levels in most of the District, but children's apparel
and home-related product sales were stronger. Most retailers say
they are optimistic and anticipate strong holiday sales.
Manufacturing
Manufacturers report little current change in plant employment, on
balance, from the last Beigebook period. Increasing textile exports
are benefiting some regional firms and electronic equipment and
computer manufacturers report increasing order backlogs, causing
them to add to factory payrolls. Regional metal producers foresee
accelerating demand for metal truck and automobile parts, as General
Motors and Ford begin to invest a total of $360 million in two
assembly plants in Georgia. Reports indicate that orders at regional
building material suppliers have increased due to damage from recent
hurricanes both in and outside the region. However, orders and
purchases have slowed at several apparel manufacturers in recent
weeks.
Tourism and Business Travel
This summer's tourism and business travel appears to be outpacing
that of last year. International traffic through Miami International
Airport has increased at double-digit rates over year-ago levels.
Our contacts there attribute this in part to the return of European
visitors. International passengers disembarking in Atlanta increased
nearly 10 percent for the year's first half. Both business and
leisure hotel occupancy rates are well above year-ago levels in
central Florida. Tourism officials expect that new attractions being
introduced will further stimulate activity there. Special casino
gambling packages and tours continue to boost visits to
Mississippi's Gulf Coast.
Construction
According to most real estate contacts, single-family home sales
continued to run modestly above healthy year-ago levels during July
and early August in most parts of the region. District realtors
believe that the housing market is being fueled by a combination of
low mortgage rates and good job growth. Home inventories continue
low in several markets, but prices have stabilized in most parts of
the region. Single-family residential construction is said to be
maintaining a healthy pace in most areas. Both realtors and builders
anticipate that the recent sales and building pace will continue
through the remainder of the year.
Real estate contacts again reported growing commercial and multifamily construction. The majority of new commercial construction remains build-to-suit. Low vacancy rates in several areas are said to be driving apartment construction. Real estate professionals anticipate that both commercial and multifamily construction will continue to increase during the remainder of 1995.
Financial Services
Bankers give mixed reports on overall loan demand. Consumer loan
demand is generally characterized as soft. Several bankers noted
that auto loan demand, in particular, continues the deceleration
that emerged over the summer. Commercial lending, on the other hand,
continues to grow. Most contacts reported moderate to strong demand
for commercial and industrial, as well as commercial real estate
loans. Several lenders noted very strong demand from small and
medium size companies.
Wages and Prices
Most contacts continue to report that wage pressures remain low.
Shortages of skilled workers are becoming less frequent. While
reports on prices paid for materials have been mixed, most
businesses expect finished goods prices to increase only moderately
over the next few months.