Beige Book Says Economy Still Growing
- Jul 17, 2014
According to the latest Beige Book, which was released by the Federal Reserve on Wednesday, all 12 Federal Reserve Districts reported expanding economic activity. Most of the districts characterized growth as “moderate,” but some said it was “modest.” In any case, most districts were optimistic about growth.
The districts were even more optimistic about real estate. Residential construction activity increased across the districts, with only St. Louis and Minneapolis (most of the Midwest, in other words) reporting a decline in overall activity. Home prices continued to rise in most places, especially within urban areas, but the San Francisco district noted a slightly slower pace of home price appreciation.
As for commercial real estate activity, the Dallas District—that’s mostly Texas—indicated strong overall commercial real estate construction activity, while the Cleveland and Atlanta districts reported increased commercial construction activity compared to a year ago, and other districts noted gains since the previous survey period. Industrial real estate construction and leasing activity was strong in the Philadelphia and Chicago districts.
Homebuilders optimistic again
Builder confidence in the market for single-family homes rose four points to 53 on the National Association of Home Builders/Wells Fargo Housing Market Index, which was released by the NAHB on Wednesday. A reading over 50 indicates that more builders view sales conditions as good than poor.
All three index components posted gains in July. The component gauging current sales conditions increased four points to 57, while the one measuring expectations for future sales rose six points to 64. The component tracking traffic of prospective buyers, while still low, increased three points to 39. Overall, the index measures builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.”
“An improving job market goes hand-in-hand with a rise in builder confidence,” NAHB chief economist David Crowe notes. “As employment increases and those with jobs feel more secure about their own economic situation, they are more likely to feel comfortable about buying a home.”
Industrial production edges up
Apart from the Beige Book, the Federal Reserve said on Wednesday that U.S.
industrial production increased 0.2 percent in June and advanced at an annualized rate of 5.5 percent in the second quarter of 2014. In June, manufacturing output edged up 0.1 percent for its fifth consecutive monthly gain, while the production at mines moved up 0.8 percent and the output of utilities dropped 0.3 percent.
Wall Street bounced upward on Wednesday, with the Dow Jones Industrial Average up 77.52 points, or 0.45 percent. The S&P 500 advanced 0.42 percent and the Nasdaq gained 0.22 percent.