Beige Book Report: St Louis
April 17, 2013
The economy of the Eighth District has expanded at a moderate pace since our previous report. Recent reports of planned activity in manufacturing have been positive, while recent reports of planned activity in the service sector have been mixed. Residential real estate market conditions have continued to improve throughout most of the District, and commercial and industrial real estate market conditions have also improved in many areas of the District. Total lending at a sample of small and midsized District banks remained largely unchanged from mid-December 2012 to mid-March 2013.
Manufacturing and Other Business Activity
Reports of plans for manufacturing activity have been positive since our previous report. Several manufacturing firms reported significant plans to add workers, expand operations, or open new facilities in the Eighth District, while a smaller number of manufacturers reported plans to lay off workers. Firms in printing, food, housewares, automobile parts, jewelry, metal, lumber products, and beverage manufacturing plan to hire new employees and expand operations in the near future. In contrast, a firm that manufactures aircraft parts announced plans to lay off workers in the District.
Reports of planned activity in the District's service sector have been mixed since our previous report. Firms in social and legal services reported plans for new hiring and expansion in the District. In contrast, firms in religious, information technology, business support, healthcare distribution, data processing, print and publishing, and transportation services reported plans to lay-off employees. Reports from retail contacts showed increases in sales and new store openings. Sales reports from auto dealers have generally been positive, and a number of contacts in the District announced plans to open new dealership locations.
Real Estate and Construction
Home sales have continued to increase throughout most of the Eighth District on a year-over-year basis. Compared with the same period in 2012, February 2013 year-to-date home sales were up 12 percent in Louisville, 14 percent in Little Rock, 4 percent in Memphis, and 11 percent in St. Louis. February 2013 year-to-date single-family housing permits increased in the majority of the District metro areas compared with the same period in 2012. Permits increased 16 percent in Memphis and 36 percent in St. Louis. In contrast, permits decreased 8 percent in Little Rock and remained unchanged in Louisville over the same period.
Commercial and industrial real estate market conditions have continued to improve throughout most of the District. A contact in northeast Arkansas reported that commercial real estate activity was strong in the Jonesboro and Paragould area but remained flat in other areas. Contacts in Louisville noted that vacancy rates of commercial and industrial properties improved. A contact in central Arkansas reported an increase of commercial real estate activity in Little Rock, and a contact in St. Louis reported strong office leasing activity in the northwest and south portions of St. Louis County. Commercial and industrial construction activity is picking up throughout most of the District. Contacts in south central Kentucky continued to report that commercial real estate construction was strong in the downtown Bowling Green area, while contacts in Louisville reported that industrial real estate construction was strong in the Shepherdsville area. A contact in Arkansas also reported several ongoing commercial construction projects in southwest and west Little Rock.
Banking and Finance
Total loans outstanding at a sample of small and midsized District banks were virtually unchanged from mid-December 2012 to mid-March 2013. Real estate lending, which accounts for 72.8 percent of total loans, increased 1.9 percent. Commercial and industrial loans, accounting for 15.1 percent of total loans, increased 3.9 percent. Loans to individuals, accounting for 4.7 percent of total loans were largely unchanged. All other loans, accounting for 7.3 percent of total loans, decreased 14.1 percent. During the same period, total deposits at these banks increased 4.3 percent.
Agriculture and Natural Resources
Farmers in the District's states expect to plant more sorghum and soybeans in 2013 than was planted in 2012; they also anticipate planting less corn, cotton, and rice. Additionally, Arkansas and Mississippi farmers expect to significantly increase corn acreage while reducing cotton and rice acreage. As of early April, over 90 percent of the District's winter wheat crop was rated in fair or better condition, and over 60 percent was rated as good to excellent. Year-to-date coal production in the District's states (excluding eastern Kentucky) at the end of February was 4.7 percent lower than the same period last year. Similarly, coal production for February was 5.7 percent lower than February 2012.