July 27, 2011
Federal Reserve Districts
|Skip to content
The pace of activity in the Second District's economy slowed somewhat since the last report. Business contacts across a variety of sectors indicate that activity has flattened out in recent weeks and that hiring has tapered off. Retail sales remained fairly sturdy in June but were mixed in early July. Consumer confidence has remained at low levels. Tourism activity has remained strong. Commercial real estate markets have been mixed since the last report, with office markets mostly stable but industrial markets weakening somewhat. The residential purchase market has been steady to somewhat softer, while the rental market has shown further signs of strengthening; there continues to be little new home construction. Finally, bankers report increased demand for commercial and industrial loans, lower delinquency rates on such loans, and no change in credit standards in any category.
Auto dealers in upstate New York report that sales were mixed in June. Rochester-area dealers note some deceleration in sales, mainly attributed to low inventories or stock-outs due to ongoing Japan-related disruptions. On the other hand, Buffalo-area dealers indicate some pickup in sales in June, after a sluggish May, as inventory problems begin to subside. Used cars are said to be selling well. Auto-industry contacts note improvement in both retail and wholesale credit conditions.
Consumer confidence surveys continue to give mixed results. Siena College reports that consumer confidence among NY State residents slipped in June, following a good gain in May, with declines occurring both upstate and downstate. In contrast, the Conference Board reports that consumer confidence among residents of the Middle Atlantic states (NY, NJ, Pa) rose in June, following a steep drop in May. Still, both surveys show confidence mired at low levels. Tourism activity in New York City has remained quite strong since the last report, as reflected in persistently high hotel occupancy rates, room rates that run 6 to 8 percent ahead of a year earlier, and a pickup in Broadway theatre attendance and revenues.
Construction and Real Estate
In contrast with the weakness in home purchase markets, rental markets have shown increasing strength. Manhattan's apartment rental market has strengthened since the last report. Rents on new leases were reported to be up 6 percent in June from a year earlier in June. In addition, one contact notes that landlords have pulled back on concessions, which are now reportedly being offered on fewer than 5 percent of new leases, down from 60 percent in mid-2010. Separately, the Jersey shore summer rental market is reported to be fairly strong this year, though the sales market for rental units remains sluggish. More broadly, many New Jersey landlords are reported to be pushing through rent increases for the first time since the recession.
Commercial real estate markets have been steady to somewhat weaker since the last report. Office vacancy rates and rents were generally stable across the District during the second quarter: market conditions improved slightly in the Buffalo and Rochester metro areas and in Manhattan, but they weakened moderately in northern New Jersey and metropolitan Albany. However, industrial real estate markets weakened modestly across most of the District, with vacancy rates edging up and rents drifting down.
Other Business Activity
Looking at overall business activity, manufacturing firms in the District report a pause in growth in June and early July, based on the latest Empire State Manufacturing Survey. Manufacturers also report that price pressures have eased since the last report and that their selling prices are steady; however, both prices paid and prices received are expected to increase in the months ahead. Non-manufacturing firms also indicate that business activity has flattened out since the last report, and contacts have become somewhat less optimistic about the near term outlook. Non-manufacturing firms report that cost pressures remain widespread and more contacts than last time report that they are raising selling prices.