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Beige Book Report: Atlanta

November 1, 1995

Overview
According to contacts, the Southeast economy continued to grow through mid-October, although there were some signs of slowing. In particular, retail sales for September were described as below expectations. Goods production generally held steady, while tourism and business travel was again a bright spot in most of the District. New home construction remained stable but healthy in most of the District, while contractors working on commercial and multifamily projects reported good growth over year-ago levels. Bankers saw overall loan demand as flat. Most contacts said there was little change in wage and price pressures compared with the last time we spoke to them.

Consumer Spending
According to retailers throughout the District, sales during September were below expectations, although volumes were up slightly over year-ago levels. Most merchants reported that inventories were heavy with fall merchandise, but they were hopeful that cooler weather would spur consumer buying. However, many retailers have revised downward their expectations for the upcoming holiday shopping season. Hurricane Opal closed stores in the panhandle of Florida for three days, dampening early October sales. Auto sales remained flat in most of the District, although some dealers reported that they had been constrained by low supplies because of the recent strike in the hauling industry.

Manufacturing
According to manufacturers, goods production was little changed from the last Beigebook. Shipments and new orders remained flat, and most contacts expect only a moderate increase over current production levels in the near term. As a result, a majority of firms contacted do not expect to increase their payrolls in the near future. Factory inventories of finished goods have risen recently, but contacts generally felt that these accumulations would only be temporary. Several trucking firms reported a reduction of the number of loads that they are shipping from regional factories. Layoffs in the apparel industry continue to be recorded in many parts of the District. However, job gains in other sectors, such as electronics and food processing, have apparently been large enough to offset these losses, leaving overall manufacturing employment levels essentially unchanged. Several factory managers in Georgia reported that renewed strength in exports has helped boost their shipments, while many building supply firms expect to see a boost in new orders and production as a result of the rebuilding that will occur in the aftermath of hurricane Opal. The energy extraction industry is showing signs of revival; a large regional, oil rig construction company will hire 350 workers over the next year. Paper producers and automotive suppliers reported relatively weak levels of new orders.

Tourism and Business Travel
Business travel and tourism continue to do well in most of the District. Fall bookings are said to be running well ahead of year- ago levels in central Florida. In: addition to the development of, new attractions, the recent announcement of expansions at several existing recreational facilities in central Florida is expected to further boost tourism to the area. Reflecting this strong recent showing, the hotel industry in central Florida reports good occupancy rates despite the addition of large number of new rooms in the last year. Contacts report that Miami's cruise industry has been adversely affected by hurricane damage inflicted upon the destination resort islands of St. Thomas and St.Croix. Tourism related to the casino and gambling industry continues to surge on Mississippi's Gulf Coast, although in New Orleans two floating casinos were closed recently.

Construction
Realtors described single-family home sales in the District as stable but healthy in September and early October. Home sales and new construction remained strongest in the Atlanta and Nashville markets. Building in the New Orleans area continued to be dominated by the remodeling and restoration projects that were necessitated by late-spring flooding. Inventories of homes for sale continue to be low in several local markets, but sales prices appear to have stabilized in most of the region. Contractors in the panhandle of Florida expect to be quite busy in the next few months repairing the nearly 18,000 homes that were partially or completely destroyed by hurricane Opal. Generally, both Realtors and builders are optimistic about their prospects through the end of the year.

Real estate contacts across the District again reported gains in commercial and multifamily construction. Most office and retail projects continue to be build-to-suit, but contacts said that some speculative projects have gotten underway in recent months. Low vacancy rates continue to spur new apartment development in many local markets. Real estate professionals anticipate that both commercial and multifamily construction will remain vigorous through the end of 1995.

Financial Services
A majority of the bank representatives contacted in the last month characterized overall loan demand as steady. Commercial lending continues to be the source of loan growth in much of the District. Several bankers reported that commercial real estate and company buyouts were two of the stronger areas of demand for financing. Consumer loan demand, particularly the financing of automobile purchases, remains soft in most areas.

Wages and Prices
Wage increases generally were reported to be stable, although wage pressures are still reported in areas that continue to experience a shortage of workers. According to industry spokespersons, construction workers, machine operators, and food service workers are the sectors in which demand for labor has been greatest. Most contacts reported little change in the prices they received for finished goods or in the prices they paid for raw materials.