Regional economic activity was sluggish but showed signs of life in late February and March, according to the Federal Reserve's Beige Book anecdotal report of economic conditions.
The report is for the Fed's Fifth District, which is based in Richmond, Va., and includes the Carolinas.
It says that many sectors of the economy, including housing and retail, remained down in the past few weeks. But other sectors showed more of a mixed picture - notably manufacturing, which the Fed says has been helped by exports fueled by the decline of the U.S. dollar.
Manufacturing activity "firmed a bit in March," the Fed said, as producers shipped more goods overseas. On the other hand, U.S. demand for products slipped, and raw materials have become more expensive - a problem for manufacturers who are finding trouble passing along price increases to cash-strapped buyers.
Another tentative bright spot: finance. "Feedback from residential lenders was more encouraging in recent weeks," the Fed said, as mortgage originations were up in some areas and interest rates in Raleigh avoided a slump. Most of those loans were made to borrowers with good credit, the Fed said, as standards tightened. Commercial lending, for its part, was "lukewarm," and activity was below average in Virginia and the Carolinas.
Agriculture also saw a boost thanks to a recent spat of rain that helped North Carolina farmers plant crops including potatoes and cabbage. Service providers reported "moderate revenue growth," with contacts at engineering and telecom companies citing increased sales.
On the other hand, retail sales dwindled, the Fed said. A Washington, D.C., contact said that shoppers were "only spending when they had to," and big-ticket items such as furniture and vehicles took a severe hit. High fuel costs also drove up prices.
The housing market "remained generally sluggish," the Fed said, "though there were pockets of improvement." Prices and construction activity both slunk.
Commercial real estate, on the other hand, saw "somewhat positive reports from the Carolinas" despite weak conditions elsewhere. Leasing was steady in Raleigh and Charlotte, the Fed said, though new construction has slowed.
Richmond was one of three Fed districts where activity was "mixed or steady," the central bank said in its nationwide Beige Book report. The other nine districts reported a slowdown in economic activity.
The Fifth District serves the District of Coumbia, Maryland, Virginia, the Carolinas and most of West Virginia.
Triangle Business Journal; April 17, 2008
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