According to the Fed’s recently released Beige Book, reports from the 12 Federal Reserve Districts suggest economic activity continued to expand gradually in July and early August across most regions and sectors.

Highlights include:

Banking & Financial Services

Credit conditions have improved over the reporting period according to District reports. Credit spreads were lower and competition for high-quality borrowers among lending institutions has increased. The New York District noted that shrinking spreads were observed particularly in commercial and industrial loans as well as in commercial mortgages. Some bankers in the Cleveland District mentioned a moderate loosening of lending guidelines. The New York, St. Louis, and Kansas City Districts reported unchanged credit standards; New York and Cleveland cited declining delinquency rates.

The direction and magnitude of changes in loan demand varied among the Districts and also with respect to type of loan. The Richmond and Atlanta Districts reported generally low demand for loans, but some pockets of growth. The Chicago District noted that growth in business loan demand was generated mostly from small and mid-size firms and for the purpose of refinancing rather than financing capital expenditures. Cleveland, St. Louis, and San Francisco mentioned small positive or negative changes in business credit demand, and relatively strong demand for consumer credit. The Kansas City District reported stable demand for commercial and industrial loans and commercial real estate loans, while Dallas noted softer demand for loans overall; however, both Districts cited increases in demand for residential real estate loans. The New York and Philadelphia Districts observed growth in most lending categories.

Manufacturing & Capital Spending

The picture in manufacturing was mixed. The Boston, Chicago, Kansas City and San Francisco Districts reported increasing demand and sales since the previous Beige Book, although the improvement was generally small and uneven, with two of these four Districts reporting that demand growth, while positive, was slowing. Six Districts reported that demand for manufactured goods was actually falling, although none reported a dramatic fall. The outlook was somewhat more positive, with six Districts reporting that manufacturers expected increasing demand and only two reporting the opposite. Capital spending also showed little change. Several Districts reported that contacted manufacturers had not revised their investment plans.

To read the full Beige Book report, click here.