Fed Says Many Sectors Experiencing Stabilization Or Modest Improvement

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Reflecting the recent economic recovery, the Federal Reserve's Beige Book report released Wednesday afternoon noted that the twelve Fed districts have indicated either stabilization or modest improvements in many sectors since the last report.

The Beige Book, a compilation of anecdotal evidence on economic conditions from each of the twelve Fed districts, showed that residential real estate and manufacturing led the more positive sector reports, with both sectors continuing a pattern of improvement that emerged over the summer.

At the same time, the Fed said that commercial real estate was reported to be one of the weakest sectors, while labor markets were typically characterized as weak or mixed.

Nonetheless, Peter Boockvar, equity strategist for Miller Tabak, noted, "The Fed's Beige Book is mostly a summary of economic data we already know."

While the Fed said that reports of gains in economic activity generally outnumber declines, it noted that virtually every reference to improvement was qualified as either small or scattered.

Most of the Fed districts reported that manufacturing activity was generally stronger since the last report, although growth rates varied by industry.

With sales boosted by the government's tax credit for first-time homebuyers, most districts also reported that housing market conditions improved in recent weeks.

As mentioned above, however, the report said that commercial real estate continued to weaken across the twelve districts. However, the Fed noted that even the commercial real estate sector had scattered bright spots.

The report also said that spending remained weak in most districts, while non-financial services firms had mixed reports in recent weeks. Meanwhile, many districts continued to report weak or declining loan demand, and many noted further erosion of credit quality.

With regard to inflation, the Fed noted that the reports showed little significant pressure on either input or output prices, although moderate increases were observed for materials prices.

The Fed's Beige Book report is typically released about two weeks before the monetary policy meeting is held, with the data included in the report used by the Federal Open Market Committee members to make their decision on interest rates.

Reflecting the recent economic recovery, the Federal Reserve's Beige Book report released Wednesday afternoon noted that the twelve Fed districts have indicated either stabilization or modest improvements in many sectors since the last report. The Beige Book, a compilation of anecdotal evidence on economic conditions from each of the twelve Fed districts, showed that residential real estate and manufacturing led the more positive sector reports. (Market News Provided by RTTNews)