Regional Update (April-June 1998)

Index The State of the States Views from the Region Southeastern Manufacturing Survey Southeastern Economic Indicators

Cover Story - Emerging Venture Capital Investment in the Southeast

The Productivity Puzzle: Increasing Output in Tight Job Market

Views from the Region

T he Federal Reserve Bank of Atlanta periodically polls business representatives throughout the Southeast about their opinions on economic trends, and their observations are published in the Fed's Beige Book. In the Beige Book issued May 6, business representatives' comments suggested that the regional economic picture continues its moderate expansion. Here is a summary of their views.

Consumer Spending

  • Most retailers reported weaker March sales but stronger early April sales than in the previous year. They agreed that recent sales had met their expectations, and inventories remain in good shape.
  • Apparel continues to be a strong seller, while home-related sales have been spotty.
  • Contacts noted that new and existing home sales were stronger in March than a year earlier, but April sales weakened slightly.
  • Most contacts reported that home construction increased. Realtors and builders anticipated modest increases in home sales and construction during the second quarter.
  • The commercial real estate market remains healthy. Suburban and central business district office markets continue to record rising occupancy and rental rates.
  • The industrial sector began to show some signs of a slowdown as vacancy rates rose slightly. In contrast, retail markets remain healthy across most of the region.
  • New orders are beginning to rise, and the factory workweek is increasing for most industries. The factory outlook remains positive as more contacts expect to increase employee payrolls and capital expenditures in the near term.
  • The aerospace industry remains strong. High-tech investment continues to grow but at a slower pace. Two pulp producers in Alabama shut down for two weeks because of a falloff in exports to Asia. The apparel industry continues to downsize, but two contacts said that some closed mills are reopening under new owners, producing different products and hiring former workers.
  • Louisiana contacts reported that the shipyard industry and the state's chemical industry continue to expand. Offshore drilling operations continue at a steady pace though low oil prices led to a decline in drilling activity on land.
Tourism and Business Travel
  • Reports from the tourism and hospitality sector indicated continued strength. Airline traffic in and out of Florida remains very strong, and cruise lines out of Miami noted the best advance booking patterns in their history. In Mississippi, contacts indicated that casino revenues are up significantly from a year ago.
  • Hotels continue to do good business, with hotel operators in Miami restoring flagship properties and hotel-motel tax collections in Palm Beach up by double digits through March.
Financial Services
  • Banking contacts reported continued moderate growth in loan demand. Consumer lending increased slightly, and commercial loan demand remains strong.
  • Mortgage loan demand continues to exhibit strength. Automobile loan demand has been mixed, and most contacts said that consumer loan quality is unchanged.
Wages and Prices
  • Labor shortages continue in parts of the District, and reports of upward wage pressures are frequent but not pervasive.
  • In parts of Florida, skilled health professionals, construction workers and computer experts are in demand. Louisiana noted a continued need for shipyard workers and a growing demand for chemical process workers. In Nashville, contacts reported difficulty attracting and retaining unskilled to moderately skilled workers.

The full text of the Beige Book is available on the Internet by clicking here.