Beige Book Report: Atlanta
December 6, 1995
Overview
According to contacts, the Southeast economy grew at a moderate pace
in November. After recording disappointing results in October,
retailers reported significant improvement in sales in November.
They also indicated that the holiday shopping season got off to a
good start over the Thanksgiving weekend, with a majority reporting
healthy year-over-year sales increases. Reports on industrial
production were mixed, with several manufacturers reporting a
substantial decline in new orders. Tourism and business travel were
said to be strong in all District states. While construction and
sales of single-family homes have slowed seasonally, realtors
indicated that these markets have been more active than is generally
the case for this time of year. Commercial and multifamily
construction continue at a strong pace, with reports of speculative
building becoming more numerous. Bankers said that loan demand
remains good overall, although commercial lending has been much
stronger than consumer lending. Most contacts reported only modest
wage and price pressures.
Consumer Spending
After recording disappointing sales results in October, most
District retailers said that sales improved significantly in
November. A majority of retailers contacted after the Thanksgiving
holiday weekend said that sales generally had met or exceeded their
expectations. Retailers in Georgia and Tennessee reported the most
positive weekend results, while contacts in Florida were somewhat
disappointed with their showing. However, retailers throughout the
District remain optimistic that holiday sales will be relatively
good this year, with healthy year-over-year growth. The best selling
items were reported to be electronics and other household durables
while apparel products made an unexpectedly strong showing in most
of the District.
Manufacturing
Although a majority of manufacturing firms contacted reported
increases in production in November, most also saw a slowing in new
orders, even in sectors that previously had recorded strong growth.
In general, fewer contacts than before indicated that they had
increased their factory payrolls since the last Beigebook and most
were less optimistic concerning their future hiring plans. More
positively, however, several companies recently have announced plans
to expand their operations in the District. In Alabama, several
firms indicated that they would be locating new manufacturing plants
in the state in order to supply the new Mercedes Benz assembly
plant. Contacts in the printing and publishing industry say that
their operations in the Nashville area continue to do well, while
building suppliers reported a boost in activity related to the
hurricane Opal rebuilding effort.
Tourism and Business Travel
Tourism and business travel remain a bright spat in the District
economy. According to tourism officials, the number of foreign and
domestic visitors to south Florida has rebounded significantly from
last year's disappointing levels. Hotel owners in central Florida
reported good occupancy rates despite the addition of a large number
of new rooms over the last year. Florida tourism officials are
optimistic that hurricane damaged beach properties in the Florida
Panhandle will be ready to accommodate both the snowbirds who will
arrive in January and February and the collegiate spring break crowd
in March and April. Tourism associated with the gaming industry in
western Louisiana and along the Mississippi Gulf Coat continues to
do quite well, although disappointing gambling revenues were said to
be a factor in the recent closing of New Orleans' land based casino.
Construction
Several real estate contacts noted that while sales and new
construction slowed seasonally, they have been better than generally
is expected at this time of the year. Inventories of new and
existing homes for sale were reported to be tight, particularly at
the low end of the market. In some areas, this lack of supply has
begun to drive home prices higher, although prices generally remain
stable in most of the District. Both realtors and builders are
optimistic that local real estate market conditions will remain
favorable, and most anticipate that sales and construction in the
first half of 1996 will exceed year-ago levels.
Commercial and multifamily real estate contacts from across the District characterized their markets as strong. Low vacancy rates and higher rents have spurred new apartment and office development in many local markets. While most office and retail projects continue to be build-to-suit, contacts also noted that a number of speculative projects have gotten underway in recent months. Real estate professionals remain optimistic about the prospects for each of these markets, and most anticipate that the pace of new construction of both commercial and multifamily projects will be strong through much of 1996.
Financial Services
The majority of bankers contacted in November characterized overall
loan demand as good. Commercial lending continues to be stronger
than consumer lending in most areas. Bankers noted that consumer
lending generally has been flat, except for a few pockets of
strength. Most contacts reported that auto lending remains weak.
Wages and Prices
In parts of the District that previously had reported increased wage
pressures due to tight labor market conditions, contacts reported
that pressures have begun to subside. Manufacturers generally
reported that commodity price pressures also have eased, although
some producers indicated that they expect to see renewed materials
price increases in the next few months.