Beige Book: Business Spending Plans Show Improvement
According to the recently released Fed Beige Book, reports from the twelve Federal Reserve Districts suggest that national economic activity
continued to expand at a modest to moderate pace during the reporting period of September through early October. Eight Districts reported similar growth rates in economic activity as during the previous
reporting period, while growth slowed some in the Philadelphia, Richmond, Chicago, and Kansas City Districts.
Contacts across Districts generally remained cautiously optimistic in their outlook for future economic activity, although many also noted an increase in uncertainty due largely to the federal government shutdown and debt ceiling debate.
According to the report, business spending grew modestly in most Districts. Overall, inventory investment proceeded at a moderate rate. Retail inventories were said to be in-line with sales in the Boston, Cleveland, Chicago, and Dallas Districts. Philadelphia and Cleveland reported that inventories were on the low side at auto dealers,
and Chicago noted the same was true at steel service centers.
Philadelphia reported an increase in manufacturers’ demand for equipment, while manufacturers in Cleveland and Chicago indicated that current capital outlays were primarily for productivity enhancing investments. Cleveland noted that low natural gas prices and regulatory uncertainty were slowing the build-out of shale-gas transport and processing infrastructure. In contrast, additional infrastructure projects to support natural resource extraction were mentioned in the Richmond, Minneapolis, and Kansas City Districts. Philadelphia and
Chicago reported an increase in spending on information technology.
Looking ahead, several Districts noted an improvement in capital spending plans. Manufacturers in Philadelphia and St. Louis, high-tech service firms in Kansas City, and retailers in the Cleveland and St. Louis Districts expected to increase capital spending in the months ahead. Technology contacts in San Francisco relayed expectations for a
near-term pick-up in spending on both hardware and software products. In addition, Philadelphia and Minneapolis reported slight increases in activity at architecture firms.
To read the latest Fed Beige Book report click here.